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Fly Leasing Ltd. ADR Stock Downgraded (FLY)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Fly Leasing Ltd. ADR (NYSE:FLY) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, relatively poor performance when compared with the S&P 500 during the past year and feeble growth in its earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • 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 Trading Companies & Distributors industry. The net income has significantly decreased by 961.8% when compared to the same quarter one year ago, falling from $3.42 million to -$29.44 million.
  • The debt-to-equity ratio is very high at 4.47 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Trading Companies & Distributors industry and the overall market, FLY LEASING LTD -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, FLY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • FLY LEASING LTD -ADR has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FLY LEASING LTD -ADR reported lower earnings of $0.02 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.46 versus $0.02).
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Fly Leasing Limited acquires, finances, leases, and sells commercial jet aircraft worldwide. The company leases its aircraft under long-term to medium-term contracts to a group of airlines. The company has a P/E ratio of 7.2, below the S&P 500 P/E ratio of 17.7. Fly Leasing Ltd. ADR has a market cap of $340.2 million and is part of the services sector and diversified services industry. Shares are up 5.4% year to date as of the close of trading on Friday.

You can view the full Fly Leasing Ltd. ADR Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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