Pantry Inc. Stock Downgraded (PTRY)

NEW YORK ( TheStreet ) -- Pantry (Nasdaq: PTRY ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, poor profit margins and weak operating cash flow. Highlights from the ratings report include: The debt-to-equity ratio is very high at 4.06 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, PTRY maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems. Net operating cash flow has significantly decreased to $8.70 million or 59.64% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower. Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 99.8% when compared to the same quarter one year prior, rising from -$166.08 million to -$0.27 million. The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 15.1%. Growth in the company's revenue appears to have helped boost the earnings per share. The Pantry, Inc. operates convenience store chain in the southeastern United States. Its stores offer a selection of merchandise, fuel, and ancillary products and services. The company has a P/E ratio of 25.8, below the average retail industry P/E ratio of 26.2 and above the S&P 500 P/E ratio of 17.7. Pantry has a market cap of $380 million and is part of the services sector and retail industry. Shares are down 17.9% year to date as of the close of trading on Tuesday. You can view the full Pantry Ratings Report or get investment ideas from our investment research center .

The Pantry To Sell 114 Stores : Convenience Store Decisions

“These are sites that don’t fit our current strategy, but they can be excellent locations for the right buyers,” says The Pantry’s vice president of real estate.

The Pantry Inc. is strategically divesting 114 locations in nine states throughout the Southeast. Stores are located in a variety of markets in Alabama (3), Florida (28), Georgia (7), Kentucky (3), Mississippi (5), North Carolina (41), South Carolina (12), Tennessee (4) and Virginia (11).

NRC Realty & Capital Advisors LLC (NRC) is assisting with the sale.

The properties are a combination of owned and leased locations and all are operating convenience stores with gas, except for one stand-alone c-store.  Properties range in size from relatively small parcels to three-acre sites and larger, and stores range from a few kiosk-only units up to 4,800 square foot stores.

“We’re very pleased to be once again partnering with NRC in this portfolio sale,” said Jim Bosworth, vice president, real estate, of The Pantry Inc., which operates 1,659 stores in 13 states under select banners. “These are sites that don’t fit our current strategy, but they can be excellent locations for the right buyers.”

“We are excited that The Pantry has again selected us to facilitate this sale,” said Dennis Ruben, managing director of NRC.  “It’s one of our largest sales in recent years, and it offers some great opportunities for qualified buyers. Anyone interested in these markets should take a serious look at the portfolio.  Some of the sites should also be of interest to buyers outside the retail petroleum and c-store sectors.”

The stores will be sold using NRC’s well-known “buy one, some or all” sealed bid sale process, although 22 sites will be offered in packages ranging from 2-8 stores each in five markets.  The bid deadline is Aug. 2, 2011.  Interested parties may register online for sale updates at www.nrc.com/1112 , or by calling the NRC Customer Service Center at (800) 747-3342, extension 1112.  A complete list of properties is available at that same Web address.

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