NEW YORK (TheStreet) -- TheStreet's Jim Cramer says the story of an AT&T (T) and DirecTV (DTV) merger will be hard to kill, but he is suspicious of the deal because DirecTV has such a strong presence in Latin America.
Cramer says Yelp (YELP) is an algorithm because when it rises on a solid quarter and some upgrades, it lifts the software-as-a-service sector up with it. Furthermore, Cramer thinks Workday (WDAY) is the most compressed and believes the entire sector can bounce.
Cramer notes Exxon Mobil's (XOM) production growth was not as great as he thought it would be, but the company made the quarter by cutting back on exploration and production.
"We rate AT&T INC (T) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- T's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has slightly increased to $8,799.00 million or 7.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.56%.
- The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.42 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, AT&T INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for AT&T INC is rather high; currently it is at 58.98%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, T's net profit margin of 11.24% compares favorably to the industry average.
- You can view the full analysis from the report here: T Ratings Report
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