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, large-cap stocks are in the spotlight.
These are stocks of companies with market capitalizations of over $10 billion that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 62 factors. In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. The stocks 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 digital television entertainment in the United States and Latin America. We have
since May 2006 due to the company's impressive revenue growth, expanding profit margins, increased cash balance and notable return on equity.
For the fourth quarter of fiscal 2008, DirecTV's revenue increased 9% year over year, led by solid subscriber growth and continued ARPU growth in the United States. The company's EPS got a slight boost as a result, rising from 30 cents to 31 cents, despite a drop in net income. Gross profit margin also improved due to the company's revenue growth, expanding 57 basis points to 46.8%. Cash and cash equivalents jumped 82.6% to $2 billion, while net operating cash flow increased 8.8%. Return on equity also showed improvement, increasing 847 basis points to 31.2% due to a lower equity base.
Management was pleased with the fourth quarter and full year results, noting that the company achieved its best quarterly net subscriber growth in over three years in the U.S. segment. While the company remains focused on obtaining new subscribers, it faces challenges from lower earnings, decreasing return on assets, and rising debt levels, which could affect financial performance and our rating in the future.
is an enterprise software company that develops, manufactures, distributes, services, and markets database, middleware, and application software worldwide. The company has been
since October 2004 because of such positive factors as its expanding profit margins, solvency, efficiency and revenue growth.
For the third quarter of fiscal 2009, the company reported that its revenue increased slightly by 1.9%. EPS remained flat, however, indicating that the revenue improvement did not trickle down to Oracle's bottom line. Although the company has reported somewhat volatile earnings recently, we feel that it is poised for EPS growth in the coming year. Oracle's gross profit margin increased since the same quarter a year ago, and is currently very high at 20.2%. Its net profit margin of 24.40% is above the industry average. Net operating cash flow increased to 25.11% in the third quarter. A quick ratio of 1.8 demonstrates strong liquidity, although a debt-to-equity ratio above the industry average indicates that Oracle's management of debt levels may need to be evaluated further.
Based on its third quarter results, record operating cash flow, and free cash flow, Oracle decided to pay its first quarterly cash dividend to holders of common stock. The $0.05 per share will be paid on May 8. Although the company may harbor some minor weaknesses, we feel that they are unlikely to have a significant impact on future financial results.
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 have
since January 2009 due to the company's impressive growth and strong fundamentals.
FPL Group reported its results for the first quarter of fiscal 2009 on April 28. Our model will update based on this information shortly, but the current rating is based on the fourth quarter of fiscal 2008. FPL's revenue grew 8.7% year-over-year in the fourth quarter due to higher energy prices, which increased from 10.74 cents per kilowatt hour to 11.55 cents per kilowatt hour. The revenue growth slightly outpaced the industry average of 1.5%, and appears to have helped boost EPS. Continuing a trend of positive EPS growth over the past two years, the company reported significant EPS improvement in the fourth quarter, aided by flat operating expenses and higher revenue. However, we anticipate underperformance relative to this pattern in the coming year. Net income increased by 81.7% when compared to the same quarter a year ago, rising from $224 million to $407 million. Net operating cash flow also increased during the quarter, growing 23.3% year over year. Higher margins were also a strength for FPL in the most recent quarter, as gross profit margin widened to 27.6% from 21% and operating margin expanded 725 basis points to 18.8%. One further strength for the organization was a slight improvement in return on equity, which increased from 12.2% to 14%.
Looking to the future, FPL Group recently received approval for several expansion projects. The group plans to add 7,000 to 9,000 megawatts of wind assets to its portfolio between fiscal 2008 and fiscal 2009. Bear in mind that rising debt, inadequate liquidity, and lower energy unit sales do put our current rating at risk, although we do feel that the strengths detailed above outweigh any potential weakness at this time.
primarily operates and franchises McDonald's restaurants. In total, the corporation has more than 30,000 restaurants in more than 100 countries. We have
since March 2004, based on strengths such as its EPS and net income growth, strong profit margin results, and relatively strong performance in comparison to the
over the past year.
McDonald's reported on April 22 that its revenue decreased slightly in the first quarter of fiscal 2009, dropping 9.6% year over year. This decline did not seem to affect the company's bottom line, however, as EPS improved 7.4% when compared to the same quarter last year. We feel that the company's trend of positive EPS growth should continue. Although McDonald's gross profit margin decreased year-over-year, a result of 36.6% is still considered strong, and the company's net profit of 19.3% compares favorably with the rest of the industry. McDonald's net income increased slightly in the first quarter, rising 3.5% from $946.1 million to $979.5 million.
McDonald's attributed its first quarter results to strong global comparable sales, and management said that the company was confident about its ability to drive shareholder value and grow the business' value. Although the company's stock price is down 8.69% when compared to last year, we do not see anything in its fundamentals that is likely to cause a continuation of last year's declining stock price. No company is perfect, but we do not currently see any significant weakness that is likely to detract from McDonald's generally positive outlook.
manufactures and sells cigarettes in the United States. We
in February 2009. The new rating is supported by a variety of strengths, such as the company's revenue growth, expanding profit margins, higher earnings, and notable return on equity.
Lorillard reported results for the first quarter of fiscal 2009 on April 27. Revenue increased only slightly in the first quarter, rising 1.2% year over year. This growth appears to have helped boost EPS, which improved 9%. Lorillard's EPS has been stable over the past year, indicating that the company has sound management over its earnings and share float. We anticipate that the EPS results will begin to experience more growth in the coming year. Net income growth exceeded that of the company's industry peers in the first quarter, rising 5.7% from $174 million to $184.00 million. Lorillard's gross profit margin is currently rather high at 50.2%, which represents an increase over last year. The company's net profit margin of 24% is currently above the industry average. An additional sign of strength for the company is a significant increase in ROE as compared to the same quarter last year. Lorillard's ROE increased from 111.83% to 134.1%.
Management announced that it was pleased with Lorillard's results in the first quarter. Although the company may harbor some minor weaknesses, we do not see any that are likely to have a significant effect on future results.
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 a rating alone cannot tell the whole story and should be part of an investor's overall research.