Foods & Inns Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Declining Profits

Foods & Inns, a microcap company in the FMCG industry, has recently been downgraded to a 'Sell' by MarketsMOJO on April 22, 2024. This decision was based on several factors, including the company's high debt to EBITDA ratio of 4.30 times, indicating a low ability to service debt. Additionally, the company's Return on Capital Employed (avg) of 7.57% suggests low profitability per unit of total capital.
Furthermore, Foods & Inns has declared negative results in December 2023 after six consecutive positive quarters. The company's profits have fallen by 70.2% and its interest expenses have grown by 35.02%. The operating profit to interest ratio is also at its lowest at 1.73 times. In the past year, the stock has underperformed the market, generating a return of 25.15% compared to the market's return of 37.60%.

However, there are some positive factors to consider. The company has shown healthy long-term growth with an annual growth rate of 29.08% in net sales and 42.62% in operating profit. Additionally, the stock is currently trading at an attractive valuation with a ROCE of 13.3 and an enterprise value to capital employed ratio of 1.7. It is also trading at a discount compared to its average historical valuations.

Despite these positive factors, the technical trend for the stock is currently sideways, indicating no clear price momentum. The stock's technical trend has deteriorated since April 22, 2024, when it was mildly bullish, and has generated a return of -1.35% since then.

In conclusion, while Foods & Inns may have some potential for long-term growth, the current financial and market performance suggests that it may not be a good investment option at this time. Investors should carefully consider all factors before making any decisions regarding this microcap FMCG company.