NEW YORK ( TheStreet) -- Vitacost.com (Nasdaq: VITC) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.
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- The gross profit margin for VITACOST.COM INC is rather low; currently it is at 23.15%. Regardless of VITC'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 -3.06% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, VITACOST.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- VITACOST.COM INC 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, VITACOST.COM INC reported poor results of -$0.58 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings (-$0.32 versus -$0.58).
- VITC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- This stock has increased by 49.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in VITC do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.