AT&T, Tiffany, Cabot: Ratings Changes
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BOSTON (
) -- TheStreet.com's stock-rating model upgraded chemical maker
Cabot
(CBT) - Get Report
to "hold."
The numbers
: Cabot swung to a fiscal third-quarter loss of $12 million, or 19 cents a share, from a profit of $27 million, or 43 cents, in the year-earlier period. Revenue fell 39% to $511 million. Its gross margin rose from 22% to 25%, but its operating margin fell from 7% to 4%. Cabot has ample liquidity, evident in its quick ratio of 1.6. A debt-to-equity ratio of 0.5 is less than the industry average, indicating conservative leverage.
The stock
: Cabot has advanced 29% this year, outpacing major U.S. indices. The stock offers an attractive 3.6% dividend yield.
The model upgraded telecommunications provider
AT&T
(T) - Get Report
to "buy."
The numbers
: Second-quarter net income dropped 15% to $3.2 billion, or 54 cents a share, as revenue remained steady at $31 billion. Its gross margin decreased from 61% to 59% and its operating margin fell from 21% to 18%. A quick ratio of 0.6 indicates less-than-ideal liquidity. And the company holds $77 billion of debt. But a debt-to-equity ratio of 0.8 reflects a balanced capital structure.
The stock
: AT&T has fallen 9% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to the market and telecom peers. The shares offer a 6.3% dividend yield, higher than the average for the
S&P 500 Index
.
The model upgraded jewelry retailer
Tiffany
(TIF) - Get Report
to "buy."
The numbers
: Second-quarter net income fell 30% to $57 million, or 46 cents. Revenue declined 16% to $612 million. Its gross margin declined from 63% to 55% and its operating margin fell from 18% to 14%. The company has a strong financial position, evident in its quick ratio of 1.7 and debt-to-equity ratio of 0.5.
The stock
: Tiffany has surged 54% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 28, a premium to the market and other specialty stores. The shares offer a 1.9% dividend yield.
The model upgraded
Federal Realty Investment
(FRT) - Get Report
, a real estate investment trust that focuses on retail properties, to "buy."
The numbers
: Second-quarter net income decreased 2% to $28 million, but earnings per share were flat at 47 cents. Revenue increased 1% to $131 million. Its gross and operating margins rose from 42% to 43%. The REIT has increased its cash balance 738% to $170 million from the year-earlier period. However, $1.9 billion of debt and a debt-to-equity ratio of 1.8 indicate excessive leverage. Heavy debt is common among REITs.
The stock
: Federal Realty is flat this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 39, indicating a premium to the market, but a discount to retail REIT peers. The shares offer a 4.2% cash distribution yield. Cash distributions are taxed differently than dividends.
The model upgraded reinsurer
Everest Re Group
(RE) - Get Report
to "buy."
The numbers
: Second-quarter net income increased 78% to $273 million, or $4.43 a share. Revenue grew 9% to $1.2 billion. Its gross and operating margins rose from 18% to 28%. Everest Re is fiscally prudent, with $2.1 billion of cash, compared to $1 billion of debt. Its debt-to-equity ratio of 0.2 is less than the industry average.
The stock
: Everest Re is up 11% this year, beating the
Dow Jones Industrial Average
, but trailing the S&P 500. The stock trades at a price-to-earnings ratio of 39, a premium to the market, but a discount to other reinsurers. The shares offer a 2.3% dividend yield.
-- Reported by Jake Lynch in Boston
.
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