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 (
-- Time Warner
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- Powered by its strong earnings growth of 59.21% and other important driving factors, this stock has surged by 59.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TWX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- TIME WARNER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TIME WARNER INC increased its bottom line by earning $3.10 versus $2.72 in the prior year. This year, the market expects an improvement in earnings ($3.68 versus $3.10).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Media industry average. The net income increased by 51.1% when compared to the same quarter one year prior, rising from $773.00 million to $1,168.00 million.
- The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
- 47.70% is the gross profit margin for TIME WARNER INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.30% is above that of the industry average.
Time Warner Inc. operates as a media and entertainment company in the United States and internationally. The company operates in three segments: Networks, Film and TV Entertainment, and Publishing. Time Warner has a market cap of $52.68 billion and is part of the services sector and media industry.
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--Written by a member of TheStreet Ratings Staff.
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