Each business day, TheStreet.com Ratings TheStreet.com Ratings compiles a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- based on data from the close of the previous trading session. Today, all-around-value stocks are in the spotlight.
These are stocks of companies that meet a number of criteria, including annual revenue of more than $500 million, lower-than-average valuations such as a price-to-sales ratio of less than 2, and leverage that is less than 49% of total capital.
In addition, they must rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors. The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.
Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large, underfunded pension plans.
provides wireless telecommunications services in Japan. We have
since February 2008. This rating is supported by a variety of strengths, such as the company's solid stock price performance, impressive record of earnings-per-share growth, and largely solid financial position.
The company reported in October that its earnings surged 40% year over year in the second quarter of fiscal 2008 due to lower costs as a result of a reduction in handset incentives. EPS improved 44.4% from 27 cents a year ago to 39 cents, continuing a trend of positive EPS growth over the past year. Return on equity exceeded that of the prior year's quarter, rising from 9.3% to 14.4%. This is a clear sign of strength within the company. In addition, the company's very low debt-to-equity ratio of 0.1 is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, a quick ratio of 1.3 indicates that NTT DoCoMo has the ability to avoid short-term cash problems. Bear in mind, however, that the company reported its third quarter earnings on Jan. 30, so our rating is subject to change once these numbers are finalized within our model.
The mobile operations market in Japan is becoming increasingly competitive, due to such factors as price competition and market entry by new businesses. The company has taken these market conditions into account in setting guidance for the fiscal year ending March 2009. Currently, it expects net income of Yen 495 billion on operating revenue of Yen 4,597 billion. Although even the best stocks can fall in an overall down market, we feel that this stock has good upside potential in almost any other market environment. In addition, we feel that its strength outweigh the fact that it currently shows weak operating cash flow.
Procter & Gamble
and its subsidiaries market over 300 branded products in more than 160 countries. Popular brands include Pampers, Tide, Ariel, Pantene, Wella, Always, Crest, Bounty, Charmin, Olay, Pringles, Iams, Downy, Actonel, Folgers, and Head & Shoulders. The company has been
since October 2002. Our recommendation is based on the company's net income growth, notable return on equity, expanding profit margins, and reasonable valuation levels.
For the second quarter of fiscal 2009, the company reported earnings growth of 53% year over year, fueled by the divestiture of its Folgers business. Earnings climbed to $5 billion, or $1.6 per share. EPS, by contrast, fell slightly when compared to the same quarter last year, dropping from 96 cents to 94 cents. However, despite its somewhat volatile EPS results in recent quarters, we feel that the company is poised for growth in the coming year. Return on equity improved slightly from 15.8% in the second quarter of fiscal 2008 to 18.9% in the most recent quarter and can therefore be considered a modest strength for P&G. A rather high gross profit margin of 55% represents a slight decrease from last year's result of 55.9%, and the company's net profit margin of 24.6% compares favorably to the rest of the Household Products industry.
Looking ahead to the third quarter of fiscal 2009, Procter & Gamble anticipates organic sales growth of about 2% to 5%. P&G expects earnings to be in the range of 78 cents to 86 cents per share. In addition, the company increased its full fiscal year 2009 EPS to a range of $4.15 to $4.25 per share. Full year 2009 guidance was also announced, with the company expecting revenue loss of 0% to 4% and earnings per share of $4.20 to $4.35. The stock's lackluster performance of late may be a cause for concern, but we feel that the strengths detailed above outweigh any weaknesses at this time.
owns and operates Florida Power & Light Company, supplying electric service to a population of more than eight million throughout most of the east and lower west coasts of Florida. We had previously rated FPL Group a hold but
on Jan. 8. This rating is supported by the company's revenue growth, increase in net income, improved EPS, and good cash flow from operations. FPL's notable return on equity also contributes to this rating.
For the fourth quarter of fiscal 2008, the company's revenue growth of 8.7% year over year was higher than the industry average of 3.4%. This growth was driven by a 39.5% increase in NextEra Resources revenue. Boosted by this revenue growth, the company's EPS improved significantly when compared to the same quarter last year, rising from 56 cents to $1.01. Net income surged 81.7% from $224 million to $407 million.
Looking ahead, management expects its full year 2009 adjusted earnings to be in the range of $4.05 and $4.25 per share. Although the company has demonstrated generally poor debt management based on most measures that we evaluated, we feel that the strengths detailed above outweigh any potential weakness at this time.
discovers, develops, manufactures, and markets prescription pharmaceuticals, biologics, and vaccines used worldwide in six disease areas: cancer, cardiovascular, gastrointestinal, infection, neuroscience, and respiratory and inflammation. The company had been rated a hold until we
on Jan. 28. This upgrade was supported by such strengths as the company's revenue growth, increase in net income, good cash flow from operations, and growth in EPS.
AstraZeneca reported its fourth quarter of fiscal 2008 on Jan. 29. Our current rating is based on the company's third quarter results, so keep in mind that the rating may change when the fourth quarter numbers are finalized in our model. For the third quarter, revenue increased 7.6% year over year, slightly outpacing the Pharmaceuticals industry average of 2%. This growth appears to have helped boost EPS, which improved 32.2% when compared to the same quarter last year. The company's earnings have been somewhat volatile recently, but we feel that it could still experience EPS growth in the coming year. Net income also increased in the third quarter, rising 28.8%. In addition, a net profit margin of 21.9% compares favorably to the industry average.
Although the company may harbor minor weaknesses, we feel that these are unlikely to have any significant affect on future financial results.
Archer Daniels Midland
is an agricultural processor that produces food ingredients, animal feeds and feed ingredients, biofuels, and other products from crops such as corn, oilseeds, wheat and cocoa. These crops are used by manufacturers worldwide to produce food products. We have recently
in December 2008, based on the company's strong revenue growth across segments, improved margins, and higher earnings.
For the first quarter of fiscal 2009, ADM's revenue surged 65% year over year to $21.6 billion, driven by higher average selling prices. These prices were the result of increases in underlying commodity costs coupled with higher sales volume for ethanol, sweeteners, starches, and merchandised oilseeds. Earnings per share more than doubled in the first quarter when compared to the same quarter last year, rising from 68 cents to $1.63. Net income also increased, rising from $441 million to $1.1 billion, representing record quarterly earnings for ADM. The company's gross profit margin improved 97 basis points to 9.7%, as revenue growth outpaces the increase in cost of sales during the quarter. Similarly, operating margin jumped 221 basis points to 6.9%. The company's healthy quick ratio of 1.2 was also a positive during the quarter.
Keep in mind that ADM faces challenges from rising debt and narrowing returns on its assets and equity.
Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.