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) -- Limoneira (Nasdaq: LMNR) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.
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- LIMONEIRA CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, LIMONEIRA CO increased its bottom line by earning $0.32 versus $0.26 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.32).
- The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
- LMNR, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for LIMONEIRA CO is currently extremely low, coming in at 14.03%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.58% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $0.20 million or 89.20% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.