Alico Inc Stock Downgraded (ALCO)

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) -- Alico (Nasdaq: ALCO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • ALCO's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.29, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 52.50% to $11.91 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.70%.
  • ALCO, with its decline in revenue, underperformed when compared the industry average of 2.6%. Since the same quarter one year prior, revenues fell by 18.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Food Products industry. The net income has significantly decreased by 72.6% when compared to the same quarter one year ago, falling from $4.08 million to $1.12 million.
  • The gross profit margin for ALICO INC is currently lower than what is desirable, coming in at 28.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.90% trails that of the industry average.

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Alico (ALCO) Stock Not on Fertile Ground, TheStreet Issues Downgrade