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) -- Embotelladora Andina (NYSE: AKO.B) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share.
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- The revenue growth greatly exceeded the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 35.2%. 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 current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that AKO.B's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
- 38.35% is the gross profit margin for EMBOTELLADORA ANDINA SA which we consider to be strong. Regardless of AKO.B's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AKO.B's net profit margin of 4.09% is significantly lower than the industry average.
- In its most recent trading session, AKO.B has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Beverages industry and the overall market, EMBOTELLADORA ANDINA SA's return on equity is below that of both the industry average and the S&P 500.