NEW YORK ( TheStreet) -- Fortress Investment Group (NYSE: FIG) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 71.4% when compared to the same quarter one year prior, rising from -$103.43 million to -$29.54 million.
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels.
- FORTRESS INVESTMENT GRP LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FORTRESS INVESTMENT GRP LLC reported poor results of -$2.35 versus -$1.86 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$2.35).
- Net operating cash flow has significantly decreased to -$103.24 million or 72.98% when compared to the same quarter last year. Despite a decrease in cash flow of 72.98%, FORTRESS INVESTMENT GRP LLC is still significantly exceeding the industry average of -722.81%.
- FIG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.87%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
-- Written by a member of TheStreet RatingsStaff