Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
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, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.
- ACTIVE STOCK TRADERS: Check out TheStreet's special offer for Real Money, headlined by Jim Cramer, now!
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 Computers & Peripherals industry. The net income has significantly decreased by 559.9% when compared to the same quarter one year ago, falling from $1,926.00 million to -$8,857.00 million.
- 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 Computers & Peripherals industry and the overall market, HEWLETT-PACKARD CO's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $2,846.00 million or 11.25% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HEWLETT-PACKARD CO has marginally lower results.
- HPQ's debt-to-equity ratio of 0.94 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that HPQ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.63 is low and demonstrates weak liquidity.
- The share price of HEWLETT-PACKARD CO has not done very well: it is down 21.48% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
Hewlett-Packard Company and its subsidiaries provide products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. The company has a P/E ratio of 7.6, above the average computer hardware industry P/E ratio of 7.4 and below the S&P 500 P/E ratio of 17.7. Hewlett-Packard has a market cap of $38.27 billion and is part of the
industry. Shares are down 22.6% year to date as of the close of trading on Thursday.
You can view the full
or get investment ideas from our
-- Written by a member of TheStreet Ratings Staff