Rating Change #2
A.H. Belo Corporation (AHC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- AHC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- A. H. BELO CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, A. H. BELO CORP continued to lose money by earning -$0.52 versus -$5.90 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.52).
- AHC, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for A. H. BELO CORP is currently extremely low, coming in at 8.80%. Regardless of AHC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.20% trails the industry average.
- Net operating cash flow has significantly decreased to -$10.85 million or 912.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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