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, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share.
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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 Trading Companies & Distributors industry. The net income has significantly decreased by 51.0% when compared to the same quarter one year ago, falling from $3.29 million to $1.61 million.
- The debt-to-equity ratio is very high at 3.75 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Trading Companies & Distributors industry and the overall market, WILLIS LEASE FINANCE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- WILLIS LEASE FINANCE CORP's earnings per share declined by 34.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WILLIS LEASE FINANCE CORP swung to a loss, reporting -$0.42 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus -$0.42).
- In its most recent trading session, WLFC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
Willis Lease Finance Corporation engages in leasing commercial aircraft engines and equipment worldwide. The company leases commercial aircraft engines and other aircraft-related equipment, as well as provides aviation services to air carriers, manufacturers, and overhaul/repair facilities. Willis Lease Finance has a market cap of $116.1 million and is part of the services sector and diversified services industry. Shares are down 8% 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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