Rating Change #6
Nippon Telegraph And Telephone Corporation (NTT) 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, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for NIPPON TELEGRAPH & TELEPHONE is rather high; currently it is at 57.70%. Regardless of NTT's high profit margin, it has managed to decrease from the same period last year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Diversified Telecommunication Services industry and the overall market, NIPPON TELEGRAPH & TELEPHONE's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $4,652.18 million or 6.66% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, NIPPON TELEGRAPH & TELEPHONE has marginally lower results.
Nippon Telegraph and Telephone Corporation, together with its subsidiaries, provides telecommunications services to residential and corporate customers in Japan. The company has a P/E ratio of 12.1, above the average telecommunications industry P/E ratio of 10.6 and below the S&P 500 P/E ratio of 17.7. Nippon Telegraph and Telephone has a market cap of $63.15 billion and is part of the technology sector and telecommunications industry. Shares are down 2.3% year to date as of the close of trading on Tuesday.You can view the full Nippon Telegraph and Telephone Ratings Report or get investment ideas from our investment research center.
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