NEW YORK ( TheStreet) -- Enersis (NYSE: ENI) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 36.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Even though the current debt-to-equity ratio is 1.01, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.91 is weak.
- ENERSIS SA has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ENERSIS SA reported lower earnings of $1.11 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.11).
- The gross profit margin for ENERSIS SA is currently lower than what is desirable, coming in at 28.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.20% trails that of the industry average.
- Net operating cash flow has decreased to $1,178.91 million or 41.75% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff