TSC Ratings' Updates: Eldorado

Eldorado's debt-to-equity ratio is very low at 0.1 and is currently below the industry average, implying very successful management of debt levels. Net income increased by 226.9% to $17 million, outperforming the S&P 500 and the metals and mining industry. The company's gross profit margin of 60.2% has increased since the same quarter last year, but the net pforit margin of 26.2% trails the industry average.

Revenue leaped by 70.3% since the same quarter last year, underperforming slightly the industry average of 71.6% growth but helping to boost EPS significantly. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, it increased its bottom line by earning 10 cents vs. 1 cent in the prior year.

We've upgraded Fidelity National Financial(FNF Quote), which provides title insurance, specialty insurance, claims management, and information services, from sell to hold. Strengths include its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Net income decreased from $6.5 million to -$198.3 million compared with the same quarter last year, significantly underperforming the S&P 500 and the insurance industry. Revenue fell by 27.3%, and EPS declined steeply. Earnings per share have declined over the last two years, a trend we anticipate should continue. During the past fiscal year, the company reported lower earnings of 57 cents vs. $2.44 in the prior year. For the next year, the market is expecting a contraction of 242.1% in earnings to -81 cents.