3 Stocks Reiterated As A Hold: CAT, NFLX, LPI
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 or Stephanie Link.
NEW YORK (TheStreet) -- TheStreet Ratings team reiterated 3 stocks with a hold rating on Tuesday based on 32 different data factors including general market action, fundamental analysis and technical indicators. The in-depth analysis of these ratings decisions goes as follows:
Caterpillar Inc:
(NYSE:
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.
Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, CATERPILLAR INC's return on equity exceeds that of both the industry average and the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for CATERPILLAR INC is currently lower than what is desirable, coming in at 31.87%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.31% trails that of the industry average.
- Net operating cash flow has decreased to $1,871.00 million or 27.48% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: Caterpillar Ratings Report
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Caterpillar has a market cap of $50.3 billion and is part of the industrial goods sector and industrial industry. Shares are down 9.3% year-to-date as of the close of trading on Monday.
Netflix Inc:
(Nasdaq:
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 26.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 72.2% when compared to the same quarter one year prior, rising from $48.42 million to $83.37 million.
- NETFLIX 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NETFLIX INC increased its bottom line by earning $4.32 versus $1.85 in the prior year. For the next year, the market is expecting a contraction of 24.1% in earnings ($3.28 versus $4.32).
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NFLX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.60 is low and demonstrates weak liquidity.
- Net operating cash flow has significantly decreased to -$38.46 million or 192.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: Netflix Ratings Report
Netflix, Inc., an Internet television network, engages in the Internet delivery of TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. The company operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. Netflix has a market cap of $28.7 billion and is part of the services sector and media industry. Shares are up 40.6% year-to-date as of the close of trading on Monday.
Laredo Petroleum Inc:
(NYSE:
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C-. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 17.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 565.0% when compared to the same quarter one year prior, rising from $12.54 million to $83.41 million.
- The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 80.22%. Regardless of LPI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LPI's net profit margin of 41.65% significantly outperformed against the industry.
- LPI'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 55.31%, 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, LPI is still more expensive than most of the other companies in its industry.
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, LPI has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: Laredo Ratings Report
Laredo Petroleum, Inc. operates as an independent energy company in the United States. It focuses on the exploration, development, and acquisition of oil and natural gas properties primarily in the Permian region of west Texas. Laredo has a market cap of $1.7 billion and is part of the basic materials sector and energy industry. Shares are up 8.4% year-to-date as of the close of trading on Monday.
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