3 Stocks Pushing The Food & Beverage Industry Lower

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.

The Food & Beverage industry as a whole closed the day down 0.5% versus the S&P 500, which was down 0.8%. Laggards within the Food & Beverage industry included Tofutti Brands ( TOF), down 5.5%, Tianli Agritech ( OINK), down 8.1%, China New Borun ( BORN), down 2.5%, Reeds ( REED), down 2.3% and S&W Seed Company ( SANW), down 2.4%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

S&W Seed Company ( SANW) is one of the companies that pushed the Food & Beverage industry lower today. S&W Seed Company was down $0.10 (2.4%) to $4.01 on average volume. Throughout the day, 138,605 shares of S&W Seed Company exchanged hands as compared to its average daily volume of 149,700 shares. The stock ranged in price between $3.81-$4.19 after having opened the day at $4.11 as compared to the previous trading day's close of $4.11.

S&W Seed Company engages in breeding, growing, processing, and selling agricultural commodities in the Western United States, Mexico, South America, the Middle East, and Africa, as well as in other countries with Mediterranean climates. S&W Seed Company has a market cap of $44.9 million and is part of the consumer goods sector. Shares are up 2.8% year-to-date as of the close of trading on Thursday. Currently there are 5 analysts who rate S&W Seed Company a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates S&W Seed Company as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and poor profit margins.

Highlights from TheStreet Ratings analysis on SANW go as follows:

  • 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 2231.7% when compared to the same quarter one year ago, falling from $0.04 million to -$0.87 million.
  • The gross profit margin for S&W SEED CO is rather low; currently it is at 16.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.70% is significantly below that of the industry average.
  • 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 Food Products industry and the overall market, S&W SEED CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 37.43% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • S&W SEED CO's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, S&W SEED CO turned its bottom line around by earning $0.03 versus -$0.26 in the prior year. This year, the market expects earnings to be in line with last year ($0.03 versus $0.03).

You can view the full analysis from the report here: S&W Seed Company Ratings Report

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At the close, Reeds ( REED) was down $0.13 (2.3%) to $5.60 on light volume. Throughout the day, 30,185 shares of Reeds exchanged hands as compared to its average daily volume of 54,600 shares. The stock ranged in price between $5.58-$5.79 after having opened the day at $5.79 as compared to the previous trading day's close of $5.73.

Reed's, Inc., together with its subsidiaries, develops, manufactures, markets, and sells natural non-alcoholic carbonated soft drinks, kombucha, candies, and ice creams primarily in the United States, Canada, Europe, and Asia. It offers 24 beverages, 4 candies, and 3 ice creams. Reeds has a market cap of $73.0 million and is part of the consumer goods sector. Shares are down 3.0% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Reeds a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Reeds as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on REED go as follows:

  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 22.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 41.2% when compared to the same quarter one year prior, rising from $0.03 million to $0.05 million.
  • REEDS INC has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, REEDS INC reported poor results of -$0.12 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.12).
  • The gross profit margin for REEDS INC is currently lower than what is desirable, coming in at 32.96%. Regardless of REED's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, REED's net profit margin of 0.38% is significantly lower than the industry average.
  • Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, REED has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

You can view the full analysis from the report here: Reeds Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

China New Borun ( BORN) was another company that pushed the Food & Beverage industry lower today. China New Borun was down $0.03 (2.5%) to $1.23 on light volume. Throughout the day, 20,310 shares of China New Borun exchanged hands as compared to its average daily volume of 65,900 shares. The stock ranged in price between $1.20-$1.28 after having opened the day at $1.28 as compared to the previous trading day's close of $1.26.

China New Borun Corporation produces and distributes corn-based edible alcohol in the People's Republic of China. China New Borun has a market cap of $32.7 million and is part of the consumer goods sector. Shares are down 1.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates China New Borun as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and poor profit margins.

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Highlights from TheStreet Ratings analysis on BORN go as follows:

  • BORN's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.0%. 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.
  • BORN's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.45 is sturdy.
  • 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 Beverages industry. The net income has significantly decreased by 46.7% when compared to the same quarter one year ago, falling from $1.78 million to $0.95 million.
  • The gross profit margin for CHINA NEW BORUN CORP -ADR is currently extremely low, coming in at 8.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.10% significantly trails the industry average.

You can view the full analysis from the report here: China New Borun Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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