3 Sell-Rated Dividend Stocks: APAM, FXCM, VALE
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer
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."
Artisan Partners Asset Management
Dividend Yield: 5.10%
Artisan Partners Asset Management
(NYSE:
) shares currently have a dividend yield of 5.10%.
Artisan Partners Asset Management Inc is publicly owned investment manager. It provides its services to pension and profit sharing plans, trusts, endowments, foundations, charitable organizations, government entities, private funds and non-U.S. funds, as well as mutual funds, non-U.S.
The average volume for Artisan Partners Asset Management has been 244,700 shares per day over the past 30 days. Artisan Partners Asset Management has a market cap of $1.6 billion and is part of the financial services industry. Shares are down 8.6% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Artisan Partners Asset Management
as a
. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- APAM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 38.25% is the gross profit margin for ARTISAN PARTNERS ASSET MGMT which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, APAM's net profit margin of 10.33% significantly trails the industry average.
- 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 Capital Markets industry and the overall market, ARTISAN PARTNERS ASSET MGMT's return on equity significantly exceeds that of both the industry average and the S&P 500.
- ARTISAN PARTNERS ASSET MGMT 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ARTISAN PARTNERS ASSET MGMT continued to lose money by earning -$0.72 versus -$2.02 in the prior year. This year, the market expects an improvement in earnings ($3.11 versus -$0.72).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 111.3% when compared to the same quarter one year prior, rising from $10.08 million to $21.30 million.
- You can view the full Artisan Partners Asset Management Ratings Report.
Dividend Yield: 11.40%
(NYSE:
) shares currently have a dividend yield of 11.40%.
FXCM Inc., through its subsidiaries, provides online foreign exchange (FX) trading and related services to retail and institutional customers worldwide. It operates in two segments, Retail Trading and Institutional Trading. The company has a P/E ratio of 21.10.
The average volume for FXCM has been 10,405,600 shares per day over the past 30 days. FXCM has a market cap of $99.5 million and is part of the financial services industry. Shares are down 87% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
FXCM
as a
. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, disappointing return on equity, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- FXCM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 87.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FXCM is still more expensive than most of the other companies in its industry.
- 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 Capital Markets industry and the overall market, FXCM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for FXCM INC is rather low; currently it is at 22.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.06% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$8.64 million or 118.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- FXCM INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FXCM INC increased its bottom line by earning $0.48 versus $0.38 in the prior year. For the next year, the market is expecting a contraction of 35.4% in earnings ($0.31 versus $0.48).
- You can view the full FXCM Ratings Report.
Dividend Yield: 5.90%
(NYSE:
) shares currently have a dividend yield of 5.90%.
Vale S.A., together with its subsidiaries, engages in the research, production, and sale of iron ore and pellets, nickel, fertilizer, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The company has a P/E ratio of 6.10.
The average volume for Vale has been 29,331,200 shares per day over the past 30 days. Vale has a market cap of $33.7 billion and is part of the metals & mining industry. Shares are down 21.5% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Vale
as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, 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 Metals & Mining industry. The net income has significantly decreased by 140.3% when compared to the same quarter one year ago, falling from $3,565.05 million to -$1,437.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, VALE SA underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Net operating cash flow has decreased to $2,940.00 million or 36.54% when compared to the same quarter last year. Despite a decrease in cash flow VALE SA is still fairing well by exceeding its industry average cash flow growth rate of -57.49%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.51%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 140.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- VALE SA 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, VALE SA reported lower earnings of $0.01 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.01).
- You can view the full Vale Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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