What To Sell: 3 Sell-Rated Dividend Stocks ARP, CEQP, TOO
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."
Dividend Yield: 13.40%
(NYSE:
) shares currently have a dividend yield of 13.40%.
Atlas Resource Partners, L.P. operates as an independent developer and producer of natural gas, crude oil, and natural gas liquids in the United States. The company operates in three segments: Gas and Oil Production, Well Construction and Completion, and Other Partnership Management.
The average volume for Atlas Resource Partners has been 945,200 shares per day over the past 30 days. Atlas Resource Partners has a market cap of $826.5 million and is part of the energy industry. Shares are down 12.6% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Atlas Resource Partners
as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1352.1% when compared to the same quarter one year ago, falling from -$40.00 million to -$580.75 million.
- Currently the debt-to-equity ratio of 1.57 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, ATLAS RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 816.88% 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.
- ATLAS RESOURCE PARTNERS 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. 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, ATLAS RESOURCE PARTNERS LP reported poor results of -$7.79 versus -$1.88 in the prior year. This year, the market expects an improvement in earnings (-$0.07 versus -$7.79).
- You can view the full Atlas Resource Partners Ratings Report.
Dividend Yield: 8.40%
(NYSE:
) shares currently have a dividend yield of 8.40%.
Crestwood Equity Partners LP is engaged in natural gas storage business in Texas and an NGL and crude oil supply and logistics business that serves customers in the United States and Canada. The company has a P/E ratio of 21.77.
The average volume for Crestwood Equity Partners has been 542,800 shares per day over the past 30 days. Crestwood Equity Partners has a market cap of $1.2 billion and is part of the energy industry. Shares are down 23.7% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Crestwood Equity Partners
as a
. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- CEQP'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 50.57%, 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, CEQP is still more expensive than most of the other companies in its industry.
- The gross profit margin for CRESTWOOD EQUITY PARTNERS LP is rather low; currently it is at 20.94%. Regardless of CEQP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CEQP's net profit margin of 3.85% compares favorably to the industry average.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, CRESTWOOD EQUITY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels.
- Net operating cash flow has significantly increased by 69.54% to $125.80 million when compared to the same quarter last year. In addition, CRESTWOOD EQUITY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -11.94%.
- You can view the full Crestwood Equity Partners Ratings Report.
Dividend Yield: 10.10%
(NYSE:
) shares currently have a dividend yield of 10.10%.
Teekay Offshore Partners L.P. provides marine transportation, oil production, and storage services to the offshore oil industry in the North Sea and Brazil. The company has a P/E ratio of 23.00.
The average volume for Teekay Offshore Partners has been 344,400 shares per day over the past 30 days. Teekay Offshore Partners has a market cap of $2.0 billion and is part of the transportation industry. Shares are down 20.8% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Teekay Offshore Partners
as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 156.3% when compared to the same quarter one year ago, falling from $41.27 million to -$23.26 million.
- The debt-to-equity ratio is very high at 3.23 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, TOO maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, TEEKAY OFFSHORE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 170.73% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- TEEKAY OFFSHORE PARTNERS 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. 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, TEEKAY OFFSHORE PARTNERS LP swung to a loss, reporting -$0.17 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus -$0.17).
- You can view the full Teekay Offshore Partners Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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