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, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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Highlights from the ratings report include:
- Powered by its strong earnings growth of 27.11% and other important driving factors, this stock has surged by 74.78% 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 has improved earnings per share by 27.1% 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 debt-to-equity ratio is somewhat low, currently at 0.65, 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 1.17, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 75.24% to $729.00 million when compared to the same quarter last year. In addition, TIME WARNER INC has also vastly surpassed the industry average cash flow growth rate of 0.20%.
- 48.20% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 10.37% trails 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 $55.3 billion and is part of the services sector and media industry. The company has a P/E ratio of 18.00, above the S&P 500 P/E ratio of 18.00. Shares are up 23.9% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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