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NEW YORK (TheStreet) -- Craft Brew Alliance (BREW) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CRAFT BREW ALLIANCE INC (BREW) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BREW's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
- BREW's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, CRAFT BREW ALLIANCE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CRAFT BREW ALLIANCE INC is currently lower than what is desirable, coming in at 32.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.08% significantly trails the industry average.
- Net operating cash flow has decreased to $2.58 million or 18.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: BREW Ratings Report