The following ratings changes were generated on Thursday, Jan. 15.
, which engages in the development and acquisition of gas and oil properties, from sell to hold. Strengths include its robust revenue growth, compelling growth in net income and good cash flow from operations. However, we find that the company's return on equity has been disappointing.
Revenue since the year-ago quarter leaped by a very impressive 536,863.5%, and net income increased by 1,520.3%, to $1,082.6 million. Current return on equity, however, is lower than its ROE from the same quarter one year prior, a clear sign of weakness within the company. Linn reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year.
Shares are off by 31% over the year, but this decline was actually not as bad as the broader market plunge during that same time frame. 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.
Magellan Health Services
, which provides managed behavioral healthcare, radiology benefits management and pharmaceutical management services, from hold to buy, driven by its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Revenue is up 17.6% since the year-ago quarter, an net operating cash flow is up 79.4% to $111.9 million. Magellan Health has a debt-to-equity ratio of 0, implying very successful management of debt levels, and a quick ratio of 2.1, which demonstrated its ability to cover short-term liquidity needs. Net income decreased by 6.3% compared with the year-ago quarter, dropping to $23.5 million.
Magellan Midstream Partners
, which engages in the transportation, storage, and distribution of refined petroleum products, from hold to buy, driven by its impressive record of EPS growth, compelling growth in net income, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.
Net income increased by 23.4% compared with the year-ago quarter, to $73.3 million. ROE also exceeded the ROE from the same quarter last year. Magellan Midstream's 41.3% gross profit margin is strong, having increased from the same quarter last year, and its 25.1% net profit margin significantly outperforms the industry average. Net operating cash flow is up 58.8% to $115.9 million compared with the year-ago quarter.
The company improved earnings per share by 15.4% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue.
, which provides property and marine, casualty, and finite risk reinsurance products worldwide, from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Platinum's debt-to-equity ratio is very low at 0.1 and is currently below that of the industry average, implying very successful management of debt levels. Revenue is down 10% since the same quarter a year ago, and ROE also decreased, implying a minor weakness in the organization. The company 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. This company has reported somewhat volatile earnings recently, and we feel it is likely to report a decline in earnings in the coming year.
Shares are down 8.4% over the past year. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures, robust revenue growth, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Syntel's 2.7 quick ratio is very high, demonstrating strong liquidity. Revenue rose by 18.1% since the same quarter a year ago, and net income increased by 20.9%. ROE also improved slightly. EPS improved by 22.7% in the most recent quarter compared with the year-ago quarter. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue.
Other ratings changes include
( SMBL), upgraded from sell to hold, and
, downgraded from hold to sell.
All ratings changes generated on Jan. 15 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.