Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
NEW YORK (
TheStreet)
-- Beam (NYSE:
BEAM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year.
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Highlights from the ratings report include:
- BEAM's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for BEAM INC is rather high; currently it is at 62.91%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BEAM's net profit margin of 11.65% significantly trails the industry average.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
- Net operating cash flow has significantly decreased to $31.10 million or 59.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Beverages industry. The net income has significantly decreased by 26.5% when compared to the same quarter one year ago, falling from $101.10 million to $74.30 million.
Beam Inc. manufactures and sells distilled spirits worldwide. The company's principal products include bourbon whiskey, tequila, Scotch whisky, Canadian whisky, vodka, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. Beam has a market cap of $9.89 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 0% year to date as of the close of trading on Friday.
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