The following ratings changes were generated on Tuesday, Jan. 6.
, which provides professional technical and management support services to government and commercial clients worldwide, from sell to hold. Strengths its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, we also find weaknesses including weak operating cash flow and poor profit margins.
Revenue rose by 46.2% since the same quarter a year ago, outpacing the industry average of 41.3% growth and helping to boost earnings per share. Aecom's debt-to-equity ratio of 0.3 is very low, though it is currently higher than that of the industry average, and the company maintains an adequate quick ratio of 1.3, which illustrates the ability to avoid short-term cash problems.
Aecom's gross profit margin is extremely low at 6.7%, though it has managed to increased from the same period last year. The net profit margin of 2.7% trails the industry average. Net operating cash flow has decreased to $63.2 million, or 46% when compared with the same quarter last year.
The stock is up 22% year over year and has clearly outperformed the
over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level that is relatively expensive compared with the rest of its industry, implying reduced upside potential.
( DT) from hold to buy, driven by its compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Net income increased by 137.3% to $1,040.5 million since the same quarter a year ago, significantly outperforming the
and the diversified telecommunication services industry. The company's gross profit margin of 66% is rather high, having increased since the same period last year, but its net profit margin of 6% trails the industry average. On the basis of return on equity, which has improved slightly compared with the same quarter last year, Deutsche Telekom underperforms the industry and the S&P 500.
Revenue fell by 30.2% since the same quarter last year, but EPS increased significantly. Deutsche Telekom has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year. During the past fiscal year, it reported lower earnings of 19 cents vs. 97 cents in the prior year. This year, the market expects an improvement in earnings to 89 cents.
from hold to buy, driven by its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Eldorado's debt-to-equity ratio is very low at 0.1 and is currently below the industry average, implying very successful management of debt levels. Net income increased by 226.9% to $17 million, outperforming the S&P 500 and the metals and mining industry. The company's gross profit margin of 60.2% has increased since the same quarter last year, but the net pforit margin of 26.2% trails the industry average.
Revenue leaped by 70.3% since the same quarter last year, underperforming slightly the industry average of 71.6% growth but helping to boost EPS significantly. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, it increased its bottom line by earning 10 cents vs. 1 cent in the prior year.
Fidelity National Financial
, which provides title insurance, specialty insurance, claims management, and information services, from sell to hold. Strengths include its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
Net income decreased from $6.5 million to -$198.3 million compared with the same quarter last year, significantly underperforming the S&P 500 and the insurance industry. Revenue fell by 27.3%, and EPS declined steeply. Earnings per share have declined over the last two years, a trend we anticipate should continue. During the past fiscal year, the company reported lower earnings of 57 cents vs. $2.44 in the prior year. For the next year, the market is expecting a contraction of 242.1% in earnings to -81 cents.
Shares jumped 31.9% year over year, outperforming the broader market during that same timeframe, but our hold rating indicates that we do not recommend additional investment in this stock at the current time.
, which engages in the processing of pork and production of hog, from hold to sell, driven by its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, generally weak debt management and disappointing return on equity.
Net income decreased by 75.9% since the same quarter a year ago, to $4.2 million, underperforming the S&P 500 and the food products industry. The 1.2 debt-to-equity ratio of is relatively high when compared with the industry average, suggesting a need for better debt level management, and the 0.4 quick ratio demonstrates an inability to cover short-term cash needs. ROE decreased from the same quarter last year, a clear sign of weakness.
EPS have declined by 223.5% year over year. During the past fiscal year, Smithfield reported lower earnings of $1.04 vs. $1.67 in the prior year. For the next year, the market is expecting a contraction of 134.6% in earnings to -36 cents. The stock has tumbled 46.2%, underperforming the S&P 500, but it is still more expensive (when compared with its current earnings) than most other companies in its industry.
Other ratings changes include
, upgraded from sell to hold, and
, downgraded from buy to hold.
All ratings changes generated on Jan. 6 are listed below.
Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates. While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows. 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 that it should be part of an investor's overall research.