Rating Change #8
National Electricity Company Of Chile Inc (EOC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and generally poor debt management.
Highlights from the ratings report include:
- Net operating cash flow has increased to $294.67 million or 27.54% when compared to the same quarter last year. Despite an increase in cash flow, ENDESA-EMPR NAC ELEC (CHILE)'s average is still marginally south of the industry average growth rate of 31.76%.
- EOC, with its decline in revenue, underperformed when compared the industry average of 12.1%. Since the same quarter one year prior, revenues slightly dropped by 5.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Independent Power Producers & Energy Traders industry and the overall market, ENDESA-EMPR NAC ELEC (CHILE)'s return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for ENDESA-EMPR NAC ELEC (CHILE) is currently lower than what is desirable, coming in at 33.80%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 12.00% is above that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 33.1% when compared to the same quarter one year ago, falling from $201.95 million to $135.11 million.
Empresa Nacional de Electricidad S.A., together with its subsidiaries, engages in the generation, transmission, production, and distribution of electricity. The company has a P/E ratio of 21, above the average utilities industry P/E ratio of 15.7 and above the S&P 500 P/E ratio of 17.7. National Electricity Company of Chile has a market cap of $13.01 billion and is part of the utilities sector and utilities industry. Shares are up 7.7% year to date as of the close of trading on Friday.You can view the full National Electricity Company of Chile Ratings Report or get investment ideas from our investment research center.