NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for A. H. BELO CORP is currently extremely low, coming in at 4.00%. Regardless of AHC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AHC's net profit margin of -3.70% significantly underperformed when compared to the industry average.
- AHC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 47.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market, A. H. BELO CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- AHC, with its decline in revenue, underperformed when compared the industry average of 19.5%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- AHC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
A. H. Belo Corporation operates as a newspaper publishing, and local news and information company primarily in the United States. It owns and operates four metropolitan daily newspapers and associated Web sites. A.H. Belo has a market cap of $91.2 million and is part of the
industry. Shares are down 7.2% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff