Rating Change #6
Washington Post Company (WPO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 1671.7% when compared to the same quarter one year prior, rising from -$5.98 million to $94.02 million.
- WPO's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 50.57% to $125.80 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.75%.
- The gross profit margin for WASHINGTON POST is rather high; currently it is at 52.20%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.29% trails the industry average.
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