Rating Change #4
Tam SA (TAM) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Net operating cash flow has significantly increased by 103.32% to $287.23 million when compared to the same quarter last year. Despite an increase in cash flow of 103.32%, TAM SA is still growing at a significantly lower rate than the industry average of 2788.00%.
- TAM, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Airlines industry and the overall market, TAM SA's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TAM SA is currently lower than what is desirable, coming in at 32.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.80% trails that of the industry average.
TAM S.A. provides passengers and cargo air transportation services in Brazil and internationally. It also engages in the aircraft acquisition, financing, and debt issuance activities. The company has a P/E ratio of 15.4, below the S&P 500 P/E ratio of 17.7. Tam has a market cap of $3.35 billion and is part of the services sector and transportation industry. Shares are up 30% year to date as of the close of trading on Tuesday.You can view the full Tam Ratings Report or get investment ideas from our investment research center.
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