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) -- Dole Food (NYSE: DOLE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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 poor profit margins and generally higher debt management risk.
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- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- DOLE FOOD CO 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 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, DOLE FOOD CO INC turned its bottom line around by earning $0.43 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.43).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.9%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite the current debt-to-equity ratio of 1.88, it is still below the industry average, suggesting that this level of debt is acceptable within the Food Products industry. Despite the fact that DOLE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.67 is low and demonstrates weak liquidity.
- The gross profit margin for DOLE FOOD CO INC is currently extremely low, coming in at 10.60%. Regardless of DOLE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DOLE's net profit margin of -0.80% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff