NEW YORK ( TheStreet) -- Alliance One International (NYSE: AOI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Tobacco industry. The net income has significantly decreased by 2427.3% when compared to the same quarter one year ago, falling from $1.32 million to -$30.74 million.
- The debt-to-equity ratio is very high at 4.72 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AOI maintains a poor quick ratio of 0.70, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for ALLIANCE ONE INTL INC is currently extremely low, coming in at 3.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.60% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$186.91 million or 160.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of ALLIANCE ONE INTL INC has not done very well: it is down 10.69% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet Ratings Staff