3 Sell-Rated Dividend Stocks: AGNC, STAY, AROC
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Sell."
Dividend Yield: 13.40%
(NASDAQ:
) shares currently have a dividend yield of 13.40%.
American Capital Agency Corp. operates as a real estate investment trust (REIT) in the United States.
The average volume for American Capital Agency has been 3,516,100 shares per day over the past 30 days. American Capital Agency has a market cap of $6.2 billion and is part of the real estate industry. Shares are down 18.1% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
American Capital Agency
as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 421.3% when compared to the same quarter one year ago, falling from $197.00 million to -$633.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of AMERICAN CAPITAL AGENCY CORP has not done very well: it is down 21.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- AMERICAN CAPITAL AGENCY CORP has experienced 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, AMERICAN CAPITAL AGENCY CORP swung to a loss, reporting -$0.73 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($2.39 versus -$0.73).
- The revenue fell significantly faster than the industry average of 6.1%. Since the same quarter one year prior, revenues fell by 31.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full American Capital Agency Ratings Report.
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Dividend Yield: 4.10%
(NYSE:
) shares currently have a dividend yield of 4.10%.
Extended Stay America, Inc. develops, owns, and operates hotels in the United States and Canada. The company has a P/E ratio of 40.95.
The average volume for Extended Stay America has been 669,600 shares per day over the past 30 days. Extended Stay America has a market cap of $3.4 billion and is part of the leisure industry. Shares are down 13.3% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Extended Stay America
as a
. 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 and generally disappointing historical performance in the stock itself.
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 compared to the Hotels, Restaurants & Leisure industry average, but is greater than that of the S&P 500. The net income has decreased by 14.2% when compared to the same quarter one year ago, dropping from $43.88 million to $37.66 million.
- The debt-to-equity ratio is very high at 3.13 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, EXTENDED STAY AMERICA INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- After a year of stock price fluctuations, the net result is that STAY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- EXTENDED STAY AMERICA INC's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXTENDED STAY AMERICA INC turned its bottom line around by earning $0.18 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.18).
- You can view the full Extended Stay America Ratings Report.
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Dividend Yield: 5.20%
(NYSE:
) shares currently have a dividend yield of 5.20%.
Archrock, Inc. provides natural gas contract compression services to customers in the oil and natural gas industry in the United States.
The average volume for Archrock has been 1,583,100 shares per day over the past 30 days. Archrock has a market cap of $793.8 million and is part of the energy industry. Shares are down 49.4% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Archrock
as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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 Energy Equipment & Services industry. The net income has significantly decreased by 117.8% when compared to the same quarter one year ago, falling from $33.80 million to -$6.03 million.
- 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, ARCHROCK INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 260.86% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ARCHROCK INC has experienced 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ARCHROCK INC reported lower earnings of $0.36 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.36).
- Despite the weak revenue results, AROC has outperformed against the industry average of 30.8%. Since the same quarter one year prior, revenues fell by 10.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full Archrock Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.