Rating Change #7
KeyCorp (KEY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, unimpressive growth in net income and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for KEYCORP is currently very high, coming in at 89.30%. Regardless of KEY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KEY's net profit margin of 18.00% compares favorably to the industry average.
- KEY, with its decline in revenue, underperformed when compared the industry average of 2.1%. Since the same quarter one year prior, revenues fell by 16.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, KEYCORP's return on equity is below that of both the industry average and the S&P 500.
- The share price of KEYCORP has not done very well: it is down 11.38% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, 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.
- Net operating cash flow has significantly decreased to $15.00 million or 98.01% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
KeyCorp operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company has a P/E ratio of nine, above the average banking industry P/E ratio of 8.3 and below the S&P 500 P/E ratio of 17.7. KeyCorp has a market cap of $7.75 billion and is part of the financial sector and banking industry. Shares are up 5.3% year to date as of the close of trading on Thursday.You can view the full KeyCorp Ratings Report or get investment ideas from our investment research center.
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