The following ratings changes were generated on Monday, March 9.
We've downgraded Alaska Communications Systems Group (ALSK), which provides integrated communications services in Alaska, from hold to sell. This rating is driven by the company's deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and weak operating cash flow.
Net income decreased to -$18.9 million in the most recent quarter from $120.4 million in the same quarter last year, significantly underperforming the S&P 500 and the diversified telecommunication services industry. The 44.2 debt-to-equity ratio is very high and above the industry average, implying very poor management of debt levels within the company. The 0.7 quick ratio illustrates the company's inability to avoid short-term cash problems. Return on equity decreased greatly since the same quarter last year, a signal of major weakness within the corporation. The 26.4% gross profit margin is lower than desirable, having decreased from the same quarter last year, and the -19.4% net profit margin is significantly below the industry average. Net operating cash flow decline 3.1% to $26.4 million compared with the year-ago quarter.
We've downgraded Dominion Resources (D), which provides electricity, natural gas and related services, from buy to hold. Strengths include the company's increase in net income, revenue growth and growth in earnings per share. However, we also find weaknesses including poor profit margins and generally poor debt management.Net income increase by 16.5% compared with the year-ago quarter, from $303 million to $353 million. Revenue rose by 13%, trailing the industry average of 38.6% growth. Earnings per share improved by 15.4%, and we feel the company is poised for EPS growth in the coming year despite reporting somewhat volatile earnings lately. Dominion's 1.7 debt-to-equity ratio is below the industry average, suggesting that this level of debt is acceptable within the multi-utilities industry. The 0.3 quick ratio is very low, demonstrating weak liquidity. Dominion's gross profit margin of 25.5% is lower than desirable, having decreased from the same quarter the previous year. The 8.5% net profit margin, however, is above the industry average.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV