TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.
The following ratings changes were generated on Thursday, April 2.
, a specialty retailer of men's suits, from sell to hold. Strengths include the company's reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
The company has a debt-to-equity ratio or 0.1, though it is higher than the industry average. It has a quick ratio of 0.6, which might imply a potential problem in covering short-term cash needs. We consider the 43% gross profit margin to be strong, though it has decreased from the year-ago quarter. The 0.3% net profit trails the industry average. Net income decreased 89.9% compared with the year-ago quarter, to $1.5 million. Return on equity also decreased, which could signal weakness within the corporation.
We've upgraded wireless communications carrier
from sell to hold. Strengths include the company's robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, we also find weaknesses including generally poor debt management and weak operating cash flow.
Revenue rose by 22.4% since the same quarter last year. Earnings per share also rose, and we feel that the company's yearlong trend of positive EPS should continue. Return on equity is below that of the
and the industry average. Net operating fell to -$80.4 million compared with the year-ago quarter. The company's debt-to-equity ratio of 1.5 is above the industry average, and its quick ratio of 1 might illustrate difficulty avoiding short-term cash problems.
, which develops and supplies semiconductor devices that accelerate and manage the transfer of data in microprocessor-based systems, from hold to sell. This rating is driven by the company's deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Net income fell to -$58.3 million in the most recent quarter from $530,000 in the most-recent quarter. ROE also decreased, which might signal weakness. EPS declined, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year. Revenue fell by 35.9% since the year-ago quarter.
Shares are down 61% over the past year, underperforming the S&P 500. 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.
, which engages in retail brokerage, securities trading, investment banking and more, from hold to buy. This rating is driven by the company's revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.
Revenue increased by 6.5% since the same quarter last year, and EPS improved. The 0.4 debt-to-equity ratio is below the industry average, implying successful management of debt levels. Net income increased by 16% compared with the year-earlier quarter, from $13.8 million to $16.1 million. Net operating cash flow increased 851.5% to $417.3 million
Shares are up 38.8% over the past year, outperforming the S&P 500. Naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
, which provides on-demand software and data solutions for the automotive retail industry, from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, we also find weaknesses including a decline in the stock price during the past year, deteriorating net income and disappointing return on equity.
The company's debt-to-equity ratio of 0 is below the industry average, implying successful management of debt levels. Its 6.9 quick ratio implies an ability to cover short-term cash needs. The gross profit margin of 62.5% had increased from the same quarter last year. The net profit margin of -1.9% trails the industry average. Revenue declined 10% since the year-ago quarter, and EPS decreased. Net operating cash flow fell 27.8% to $17.2 million. ROE decreased from the year-ago quarter.
All ratings changes from April 2 are listed below.
Note: Our quantitative model makes stock recommendations based on GAAP figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings' reports in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.
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