The following ratings changes were generated on Wednesday, Oct. 29.
, which engages in the acquisition, exploration, and development of gold properties, from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Revenue rose by 19.8% since the same quarter one year prior but significantly trailed the industry average of 81.1%. Barrick's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying very successful management of debt levels. Thecompany also maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems. The gross profit margin is rather high at 51.9%, having increased from the same quarter the previous year. Net profit margin of 24.70% trails the industry average.
Net income increased by 22.5% over the same quarter a year ago, to $485 million, outperforming the
but underperforming the metals and mining industry. Shares are down 52.66%, worse than the S&P 500, which could make the stock attractive down the road. However, at this time we believe it is too soon to buy.
Corn Products International
( CPO), which manufactures and markets food ingredients and industrial products derived from wet milling and processing of corn and other starch-based materials, from buy to hold. Strengths include its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. Weaknesses include weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.
Corn Products reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago, and we feel the company's two-year trend of positive EPS growth should continue, improving business performance. During the past fiscal year, Corn Products earned $2.59, vs. $1.63 in the prior year, and this year, the market expects an improvement in earnings to $3.29. Net income growth of 72.4%, to $88.1 million, from the same quarter one year ago has significantly exceeded that of the S&P 500 and the food products industry. The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying successful management of debt levels. Its 0.83 quick ratio, however, is somewhat weak and could be cause for future problems.
Net operating cash flow has significantly decreased to -$217.00 million, or 364.63% when compared with the same quarter last year. In addition the firm's growth rate is much lower than the industry average. Shares are down 55.08% on the year, worse than the performance of the S&P 500. Naturally, the overall market trend is bound to be a significant factor. The stock's sharp decline could be considered 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.
, which engages in the manufacture and distribution of products and services for agriculture and forestry worldwide, from buy to hold. Strengths include the company's impressive revenue and earnings growth, healthy cash position and improving returns. These positives are countered by high leverage and declining margins. Although the company recorded double-digit overseas sales growth and improved price realizations, the global economic downturn, escalating raw-material costs and lower construction and forestry sales are areas of concern.
Deere's third-quarter revenue grew 16.7% to $7.74 billion, helped by improved price realizations and strong worldwide equipment sales, which were partially offset by the economic downturn in the U.S. Worldwide equipment operations sales spiked 18.1% to $7.07 billion due to a 5.0% contribution from favorable currency translations and a 2% boost from price changes. During the quarter, Deere's commercial and consumer equipment revenue inched down 1% year over year to $1.33 billion, hurt by lower sales volumes, which was offset by improved price realizations. Construction and forestry sales fell 7.0% to $1.19 billion due to lower shipment volumes and sluggish U.S. market conditions.
Despite a drop in margins, the company reported 7.1% earnings growth to $575.20Million, or $1.32 per share, from $537.20 million, or $1.19 per share, the same quarter a year ago, as soaring crop prices boosted global demand for agricultural equipment, especially tractors and harvesting equipment. For the quarter ended July 31, 2008, the company's leverage worsened, as its debt-to-equity ratio advanced to 3.12 from 2.64 a year ago. DE's gross profit margin dipped 181 basis points to 30.60%, and operating margin slipped 177 basis points to 14.72%, hurt by higher raw material costs and operating costs.
During the latest third quarter, Deere's cash position improved as cash and cash equivalents soared 59.2% to $2.82 billion. Return on assets advanced 65 basis points to 5.11% and return on equity climbed 746 basis points to 28.25%, aided by earnings growth.
from buy to hold. Strengths include its growth in earnings per share, increase in net income and revenue growth. Weaknesses include weak operating cash flow and poor profit margins.
Disney has improved earnings per share by 13.8% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years, a trend feel that should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Disney earned $2.24, vs. $1.60 in the prior year. This year, the market expects an improvement in earnings to $2.31.Net income increased 9% over the same quarter last year, to $1.28 million, outperforming the S&P 500 and the media industry average. Its debt-to-equity ratio of 0.41 is low, but it is higher than that of the industry average, implying that management of debt levels may need to be evaluated further. The company's quick ratio of 0.82 is weak.
Disney's gross profit margin is currently lower than what is desirable, coming in at 26.20%.It has decreased from the same quarter the previous year. The net profit margin of 13.90% is above that of the industry average. Net operating cash flow has decreased to $936 million, or 19.93% when compared with the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
( MEE), which produces, processes, and sells bituminous coal, from hold to sell, based on its deteriorating net income, disappointing return on equity, poor profit margins, generally weak debt management and generally disappointing historical performance in the stock itself.
Net income decreased 367.1% to -$93.34 million when compared with the same quarter one year ago, underperforming the S&P 500 and the oil, gas and consumable fuels industry. Return on equity has greatly decreased when compared with its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Massye's return on equity significantly trails both the industry average and the S&P 500. The gross profit margin for is currently lower than what is desirable, coming in at 27.40%, although it has managed to increase from the same period last year. Massey's net profit margin of -11.50% significantly underperformed the industry average.
The debt-to-equity ratio of 1.47 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, Massey's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs. Shares are down 41.15% on the year, reflecting several forces, including the overall decline in the broad market and the sharp decline in the company's earnings per share,down 369.76%. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it 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.
Other ratings changes include
( ZRAN) and
, both downgraded from hold to sell.
All ratings changes generated on Oct. 29 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.
This article was written by a staff member of TheStreet.com Ratings.