Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
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 deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electric Utilities industry. The net income has significantly decreased by 98.8% when compared to the same quarter one year ago, falling from $342.55 million to $4.15 million.
- The debt-to-equity ratio is very high at 3.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electric Utilities industry and the overall market, EMPRESA DISTRIBUIDORA Y COM's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $31.33 million or 48.87% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The revenue fell significantly faster than the industry average of 5.4%. Since the same quarter one year prior, revenues fell by 29.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
Empresa Distribuidora y Comercializadora Norte S.A., a public service company, is engaged in the distribution and sale of electricity in Argentina. Empresa Distribuidora y Comercializadora No has a market cap of $501.3 million and is part of the utilities sector and utilities industry. Shares are up 109.3% year to date as of the close of trading on Thursday.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.