TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.
The following ratings changes were generated on Tuesday, June 30.
We've downgraded AirMedia Group (AMCN - Get Report) from hold to sell, driven by its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Net income fell to -$1.25 million in the most recent quarter from $7.28 million in the same quarter last year, underperforming the media industry average. The 18.4% gross profit margin has decreased significantly from the year-ago period, and the 3.9% net profit margin is below the industry average. AirMedia has experienced a steep decline in earnings per share compared with the year-ago quarter, and we feel it is likely to report a decline in earnings in the coming year. The company has no debt to speak of and maintains a quick ratio of 7.7, demonstrating its ability to cover short-term cash needs.
Stocks have tumbled 54.5% over the past year, underperforming the S&P 500, though the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.We've upgraded Dominion Resources (D - Get Report) from hold to buy, driven by its revenue growth, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.