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) -- Mead Johnson Nutrition Company (NYSE: MJN) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- Compared to other companies in the Food Products industry and the overall market, MEAD JOHNSON NUTRITION CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for MEAD JOHNSON NUTRITION CO is rather high; currently it is at 63.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.67% is above that of the industry average.
- Net operating cash flow has increased to $252.60 million or 46.09% when compared to the same quarter last year. In addition, MEAD JOHNSON NUTRITION CO has also vastly surpassed the industry average cash flow growth rate of -14.03%.
- MEAD JOHNSON NUTRITION CO 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. During the past fiscal year, MEAD JOHNSON NUTRITION CO increased its bottom line by earning $2.96 versus $2.47 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.96).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Food Products industry average. The net income increased by 56.8% when compared to the same quarter one year prior, rising from $85.60 million to $134.20 million.
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