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) -- Delhaize Group (NYSE: DEG) 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, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.
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- The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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 current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels.
- DELHAIZE GROUP - ETS DLHZ FR' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, DELHAIZE GROUP - ETS DLHZ FR increased its bottom line by earning $0.75 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $0.75).
- The gross profit margin for DELHAIZE GROUP - ETS DLHZ FR is currently lower than what is desirable, coming in at 27.19%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.55% trails that of the industry average.
- Net operating cash flow has significantly decreased to $166.70 million or 60.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.