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 generally weak debt management, weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NLSN maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has declined marginally to $116.00 million or 4.91% 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.
- NLSN has underperformed the S&P 500 Index, declining 7.63% from its price level of one year ago. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Professional Services industry and the overall market, NIELSEN HOLDINGS NV's return on equity is below that of both the industry average and the S&P 500.
- Despite the weak revenue results, NLSN has outperformed against the industry average of 15.7%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Nielsen Holdings N.V., through its subsidiary, The Nielsen Company B.V., operates as an information and measurement company worldwide. The company has a P/E ratio of 29.9, below the average computer software & services industry P/E ratio of 34 and above the S&P 500 P/E ratio of 17.7. Nielsen has a market cap of $9.93 billion and is part of the
industry. Shares are down 5.8% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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.