Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Alliance One International (NYSE: AOI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
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- The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 12.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ALLIANCE ONE INTL INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALLIANCE ONE INTL INC turned its bottom line around by earning $0.29 versus -$0.89 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.29).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for ALLIANCE ONE INTL INC is currently extremely low, coming in at 10.30%. Regardless of AOI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AOI's net profit margin of 3.20% is significantly lower than the same period one year prior.
- The debt-to-equity ratio is very high at 4.75 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AOI maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet Ratings Staff