The following ratings changes were generated on Thursday, Feb. 26.
We've downgraded independent energy company Quicksilver Resources (KWK) from hold to sell, driven by its deteriorating net income, generally weak debt management, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Net income fell from $396.1 million in the year-ago quarter to -$456.9 million in the most recent quarter, significantly underperforming the S&P 500 and the oil, gas and consumable fuels industry. Quicksilver's 2.4 debt-to-equity ratio is very high and currently higher than the industry average, implying very poor management of debt levels within the company. The 0.4 quick ratio clearly demonstrates an inability to cover short-term cash needs. ROE has greatly decreased since the year-ago quarter, a signal of major weakness within the corporation. EPS declined 218.7%, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year.
Shares have tumbled by 82.2% over the year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and 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.We've downgraded integrated media and merchandise company Martha Stewart Living Omnimedia (MSO - Get Report) from hold to sell, driven by its disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.