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NEW YORK (TheStreet) -- Natural Grocers by Vitamin Cottage (NGVC) has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NATURAL GROCERS VITAMIN CTGE (NGVC) 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 robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NATURAL GROCERS VITAMIN CTGE has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NATURAL GROCERS VITAMIN CTGE increased its bottom line by earning $0.60 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.60).
- NGVC's debt-to-equity ratio is very low at 0.22 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 0.15 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has decreased to $8.27 million or 21.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- NGVC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 37.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NGVC is still more expensive than most of the other companies in its industry.
- You can view the full analysis from the report here: NGVC Ratings Report