The following ratings changes were generated on Wednesday, March 11.
We've downgraded sporting-goods retailer
Dick's Sporting Goods
( DKX) from hold to sell, driven its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Net income decreased to -$104.4 million in the most recent quarter from $73.2 million in the year-ago quarter, significantly underperforming the
and the specialty retail industry. Return on equity also greatly decreased, a signal of major weakness within the corporation. DSG's 31.2% gross profit margin is lower than desirable, having decreased from the year-ago quarter, and its -8.6% net profit margin is significantly below the industry average. EPS are down 250% compared with the year-earlier quarter, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year.
Shares have tumbled 50% over the year, underperforming the S&P 500, which 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.
We've initiated coverage on
, which provides technology-based nuclear services, at sell, driven by its generally weak debt management and poor profit margins.
EnergySolutions' 1.2 debt-to-equity ratio is high relative to the industry average, suggesting a need for better debt-level management, and its 0.9 quick ratio is poor, illustrating its inability to avoid short-term cash problems. The 16.3% gross profit margin is rather low, having decreased from the year-ago quarter, and the 0.6% net profit margin trails the industry average. Revenue decreased by 4.2% since the same quarter a year ago, though EPS improved. ROE underperformed the S&P 500 and the industry average.
Shares are down 67.7% over the past year, underperforming the S&P 500.
, which operates as a manufacturer, wholesaler and distributor of coffee and spices, from hold to sell. This rating is driven by the company's overall disappointing return on equity.
ROE is lower than it was in the year-ago quarter, underperforming both the S&P 500 and the industry average, a clear sign of weakness. Net income increased from -$230,000 in the year-ago quarter to -$110,000, significantly underperforming the S&P 500 and the food products industry. EPS improved significantly compared with the year- ago quarter. Net operating cash flow increased by 121.8% to $4.2 million compared with the year-ago quarter.
, which engages in the manufacture and marketing of health and hygiene products worldwide, from buy to hold. Strengths include its notable return on equity and expanding profit margins. However, we also find weaknesses including deteriorating net income, generally poor debt management and weak operating cash flow.
ROE exceeded the company's ROE from the year-ago quarter, a clear sign of strength. Kimberly-Clark's 35.8% gross profit margin is strong, having increased from the same quarter last year, but its 9.1% net profit margin significantly trails the industry average. Revenue dropped by 3.4% since the same quarter a year ago, and EPS also decreased. Net income fell 8%, from $456 million to $419.3 million. The company's debt-to-equity ratio of 1.5 is quite high overall and relative to the industry average, and its 0.6 quick ratio demonstrates its lack of ability to cover short-term liquidity needs.
We've downgraded wholesale footwear retailer
from hold to sell, driven by its deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and weak operating cash flow.
Net income fell from -$46.6 million in the year-ago quarter to -$144 million in the most recent quarter, significantly underperforming the S&P 500 and the specialty retail industry. CB's 1.5 debt-to-equity ratio is high relative to the industry average, suggesting a need for better debt-level management. Its 0.9 quick ratio illustrates the company's inability to cover short-term cash problems. ROE has greatly decreased from the same quarter last year, a signal of major weakness. CB's gross profit margin of 31.2% is lower than desirable, having decreased from the year-ago quarter, and its -19.6% net profit margin is below the industry average. Net operating cash flow decreased to -$36.7 million in the most recent quarter.
Other ratings changes included
, downgraded from buy to hold, and
Jos. A. Bank Clothiers
, downgraded from buy to hold.
All ratings changes generated on March 11 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.