Rating Change #3

Keycorp ( KEY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • KEYCORP 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. This trend suggests that the performance of the business is improving. During the past fiscal year, KEYCORP turned its bottom line around by earning $0.47 versus -$2.51 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.47).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 242.8% when compared to the same quarter one year prior, rising from $70.00 million to $240.00 million.
  • Net operating cash flow has increased to $1,042.00 million or 46.76% when compared to the same quarter last year. Despite an increase in cash flow, KEYCORP's average is still marginally south of the industry average growth rate of 46.96%.
  • The revenue fell significantly faster than the industry average of 20.1%. Since the same quarter one year prior, revenues fell by 12.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • KEY has underperformed the S&P 500 Index, declining 23.21% 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.

KeyCorp operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company has a P/E ratio of 6.7, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. KeyCorp has a market cap of $6.2 billion and is part of the financial sector and banking industry. Shares are down 28.6% year to date as of the close of trading on Tuesday.

You can view the full KeyCorp Ratings Report or get investment ideas from our investment research center.

If you liked this article you might like

GE Nearing Deal to Sell Industrial Solutions Unit to Swiss-Based ABB

These Stocks Are Ready to Reverse Course

Stocks Lower as GE Depresses Dow, Microsoft Dips

Petrofac Falls 30% After Suspending COO Amid Fraud Investigation

General Dynamics, Raytheon, Northrop Grumman: 'Mad Money' Lightning Round