What To Hold: 3 Hold-Rated Dividend Stocks USAC, WPT, CLMT
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: 12.90%
(NYSE:
) shares currently have a dividend yield of 12.90%.
USA Compression Partners, LP provides natural gas compression services under term contracts with customers in the oil and gas industry in the United States. It engineers, designs, operates, services, and repairs its compression units and maintains related support inventory and equipment. The company has a P/E ratio of 81.50.
The average volume for USA Compression Partners has been 196,300 shares per day over the past 30 days. USA Compression Partners has a market cap of $534.1 million and is part of the energy industry. Shares are down 2.8% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
USA Compression Partners
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations 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 disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 31.4%. Since the same quarter one year prior, revenues rose by 24.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 57.57% to $34.04 million when compared to the same quarter last year. In addition, USA COMPRESSION PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -19.44%.
- USA COMPRESSION PRTNRS LP 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, USA COMPRESSION PRTNRS LP increased its bottom line by earning $0.58 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.58).
- 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 311.5% when compared to the same quarter one year ago, falling from $7.52 million to -$15.90 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 288.88% compared to the year-earlier 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, USAC is still more expensive than most of the other companies in its industry.
- You can view the full USA Compression Partners Ratings Report.
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Dividend Yield: 8.70%
(NYSE:
) shares currently have a dividend yield of 8.70%.
World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 14.39.
The average volume for World Point Terminals has been 28,100 shares per day over the past 30 days. World Point Terminals has a market cap of $253.8 million and is part of the energy industry. Shares are down 34.9% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
World Point Terminals
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures 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 disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- WPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
- WORLD POINT TERMINALS's earnings per share declined by 7.4% 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, WORLD POINT TERMINALS increased its bottom line by earning $0.98 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.98).
- 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WORLD POINT TERMINALS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Looking at the price performance of WPT's shares over the past 12 months, there is not much good news to report: the stock is down 25.92%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
- You can view the full World Point Terminals Ratings Report.
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Calumet Specialty Products Partners
Dividend Yield: 10.00%
Calumet Specialty Products Partners
(NASDAQ:
) shares currently have a dividend yield of 10.00%.
Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon products in North America. It operates in three segments: Specialty Products, Fuel Products, and Oilfield Services.
The average volume for Calumet Specialty Products Partners has been 315,200 shares per day over the past 30 days. Calumet Specialty Products Partners has a market cap of $2.1 billion and is part of the energy industry. Shares are up 19.1% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Calumet Specialty Products Partners
as a
. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- 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 130.1% when compared to the same quarter one year prior, rising from -$8.30 million to $2.50 million.
- Net operating cash flow has significantly increased by 168.08% to $70.60 million when compared to the same quarter last year. In addition, CALUMET SPECIALTY PRODS -LP has also vastly surpassed the industry average cash flow growth rate of -19.63%.
- CALUMET SPECIALTY PRODS -LP reported significant earnings per share improvement 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, CALUMET SPECIALTY PRODS -LP reported poor results of -$1.80 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus -$1.80).
- In its most recent trading session, CLMT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- Currently the debt-to-equity ratio of 1.97 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CLMT has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Calumet Specialty Products Partners Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.