NEW YORK ( TheStreet) -- Green Mountain Coffee Roasters (Nasdaq: GMCR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 24.8%. Since the same quarter one year prior, revenues rose by 36.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GREEN MTN COFFEE ROASTERS has improved earnings per share by 31.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GREEN MTN COFFEE ROASTERS increased its bottom line by earning $1.30 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($2.40 versus $1.30).
- Although GMCR's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- 40.10% is the gross profit margin for GREEN MTN COFFEE ROASTERS which we consider to be strong. Regardless of GMCR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GMCR's net profit margin of 10.50% compares favorably to the industry average.
- GMCR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 66.42%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, GMCR is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff