5 More Companies That Are Distressing Investors

TheStreet Ratings Recommendation: SELL

Altman Z Score: -4.08 Buy S Ratings Report

Sprint has rallied significantly in the past few weeks, yet the company is still less than desirable. It has $15 billion in net debt. While a turnaround is in progress at Sprint, it remains to be seen whether the company can continue with its forward momentum and steal any sort of market share from cell phone giants AT&T and Verizon. Here's a snippet from our report:

"Sprint's gross profit margin for the second quarter of fiscal 2012 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line.

"Sprint has average liquidity. Currently, the quick ratio is 1.37, which shows that, technically, this company has the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

"At the same time, stockholders' equity ("net worth") has significantly decreased by 30.75% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future."

Calpine: (CPN)

TheStreet Ratings Recommendation: SELL

Altman Z Score:-0.32 Buy CPN Ratings Report

Calpine, an independent power producer that generates electricity and sells it into wholesale power markets, has rallied 17% in the past year, mostly due to the drop in natural gas prices and expectations that this would benefit Calpine. Unfortunately, the stock looks pricey here, trading at 76 times 2012 earnings estimates. Here's a snippet from our report:

"The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, weak operating cash flow and feeble growth in its earnings per share.

"The debt-to-equity ratio is very high at 2.91 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.

"To add to this, CPN has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs."

Equity research manager Chris Stuart, CFA, joined TheStreet Ratings after working as a senior investment analyst with Merrill Lynch covering small-cap equity and alternative investment strategies. Prior to that, Stuart worked for One Beacon Insurance as an actuarial analyst and at H&R Block as a financial adviser.

Stuart earned his bachelor's degree in finance from the University of Massachusetts, Amherst. He holds a Chartered Financial Analyst (CFA) designation and is a member of the Boston Security Analysts Society (BSAS) and the CFA Institute.

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