3 Stocks Reiterated As A Hold: MGM, CAT, IBM
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 Thursday 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:
MGM Resorts International:
(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 expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- 36.85% is the gross profit margin for MGM RESORTS INTERNATIONAL which we consider to be strong. 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 -14.34% is in-line with the industry average.
- MGM RESORTS INTERNATIONAL 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. 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, MGM RESORTS INTERNATIONAL continued to lose money by earning -$0.32 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus -$0.32).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 3.46 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MGM maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
- 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 502.5% when compared to the same quarter one year ago, falling from -$56.81 million to -$342.26 million.
- You can view the full analysis from the report here: MGM Resorts International Ratings Report
MGM Resorts International, through its wholly owned subsidiaries, owns and/or operates casino resorts. The company operates in two segments, Wholly Owned Domestic Resorts and MGM China. MGM Resorts International has a market cap of $9.8 billion and is part of the services sector and leisure industry. Shares are down 8.4% year-to-date as of the close of trading on Wednesday.
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 1.3%. 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 $48.4 billion and is part of the industrial goods sector and industrial industry. Shares are down 12.9% year-to-date as of the close of trading on Wednesday.
International Business Machines Corp:
International Business Machines
(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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.
Highlights from the ratings report include:
- 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 IT Services industry and the overall market, INTL BUSINESS MACHINES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- INTL BUSINESS MACHINES CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, INTL BUSINESS MACHINES CORP increased its bottom line by earning $15.68 versus $15.37 in the prior year. This year, the market expects an improvement in earnings ($15.99 versus $15.68).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.9%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $6,059.00 million or 7.18% when compared to the same quarter last year. Despite a decrease in cash flow of 7.18%, INTL BUSINESS MACHINES CORP is in line with the industry average cash flow growth rate of -13.17%.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IBM has underperformed the S&P 500 Index, declining 13.88% from its price level of one year ago. 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.
- You can view the full analysis from the report here: International Business Machines Ratings Report
International Business Machines Corporation provides information technology (IT) products and services worldwide. International Business Machines has a market cap of $156.0 billion and is part of the technology sector and computer software & services industry. Shares are down 2.3% year-to-date as of the close of trading on Wednesday.
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