The firm raised its price target to $29 from $14.
"Under a scenario where the assets are redistributed into an effective 'dealer' network - or other strategic alternative - the value of the PTRY asset base could be much higher than current valuation," said analyst Dane Leone.
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TheStreet Ratings team rates PANTRY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PANTRY INC (PTRY) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 454.85% to $2.92 million when compared to the same quarter last year. In addition, PANTRY INC has also vastly surpassed the industry average cash flow growth rate of 11.98%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- PTRY, with its decline in revenue, slightly underperformed the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 6.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 3.04 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.28, which clearly demonstrates the inability to cover short-term cash needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market, PANTRY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PTRY Ratings Report