What To Hold: 3 Hold-Rated Dividend Stocks NS, MAT, MEMP
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 "Hold."
Dividend Yield: 7.30%
(NYSE:
) shares currently have a dividend yield of 7.30%.
NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia primarily in the United States and the Netherlands. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The company has a P/E ratio of 28.02.
The average volume for NuStar Energy L.P has been 305,700 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $4.7 billion and is part of the energy industry. Shares are up 2.7% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
NuStar Energy L.P
as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
Highlights from the ratings report include:
- NUSTAR ENERGY LP 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NUSTAR ENERGY LP turned its bottom line around by earning $2.14 versus -$2.82 in the prior year. This year, the market expects an improvement in earnings ($2.57 versus $2.14).
- 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 114.6% when compared to the same quarter one year prior, rising from -$364.82 million to $53.39 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for NUSTAR ENERGY LP is rather low; currently it is at 23.08%. Regardless of NS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NS's net profit margin of 7.83% compares favorably to the industry average.
- Currently the debt-to-equity ratio of 1.65 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, NS maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
- You can view the full NuStar Energy L.P Ratings Report.
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Dividend Yield: 6.40%
(NASDAQ:
) shares currently have a dividend yield of 6.40%.
Mattel, Inc. designs, manufactures, and markets a range of toy products worldwide. The company operates in three segments: North America, International, and American Girl. The company has a P/E ratio of 16.39.
The average volume for Mattel has been 5,302,900 shares per day over the past 30 days. Mattel has a market cap of $8.0 billion and is part of the consumer durables industry. Shares are down 22.4% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Mattel
as a
. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- Net operating cash flow has slightly increased to $1,032.87 million or 1.29% when compared to the same quarter last year. In addition, MATTEL INC has also modestly surpassed the industry average cash flow growth rate of -0.33%.
- MAT's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MAT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.90 is high and demonstrates strong liquidity.
- 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 Leisure Equipment & Products industry and the overall market on the basis of return on equity, MATTEL INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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 Leisure Equipment & Products industry. The net income has significantly decreased by 59.4% when compared to the same quarter one year ago, falling from $369.25 million to $149.93 million.
- You can view the full Mattel Ratings Report.
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Dividend Yield: 13.20%
(NASDAQ:
) shares currently have a dividend yield of 13.20%.
Memorial Production Partners LP, through its subsidiary, engages in the acquisition, development, exploitation, and production of oil and natural gas properties. The company has a P/E ratio of 10.04.
The average volume for Memorial Production Partners has been 966,500 shares per day over the past 30 days. Memorial Production Partners has a market cap of $1.4 billion and is part of the energy industry. Shares are up 15.8% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Memorial Production Partners
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 19.6%. Since the same quarter one year prior, revenues rose by 33.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MEMORIAL PRODUCTION PRTRS LP 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MEMORIAL PRODUCTION PRTRS LP increased its bottom line by earning $0.85 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.85).
- Net operating cash flow has significantly decreased to $41.12 million or 50.07% 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.
- The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, MEMP has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Memorial Production Partners Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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