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) -- Dean Foods Company (NYSE: DF) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations 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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- Compared to other companies in the Food Products industry and the overall market, DEAN FOODS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 72.71% to $115.33 million when compared to the same quarter last year. In addition, DEAN FOODS CO has also vastly surpassed the industry average cash flow growth rate of -57.41%.
- DEAN FOODS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DEAN FOODS CO swung to a loss, reporting -$8.60 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus -$8.60).
- The gross profit margin for DEAN FOODS CO is rather low; currently it is at 25.00%. Regardless of DF's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.20% trails the industry average.
- The debt-to-equity ratio is very high at 68.24 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
-- Written by a member of TheStreet Ratings Staff