NEW YORK ( TheStreet) -- McClatchy Company (NYSE: MNI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 443.1% when compared to the same quarter one year prior, rising from $4.95 million to $26.87 million.
- The gross profit margin for MCCLATCHY CO is rather high; currently it is at 52.30%. Regardless of MNI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.00% trails the industry average.
- MNI, with its decline in revenue, underperformed when compared the industry average of 13.4%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- MCCLATCHY CO 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MCCLATCHY CO increased its bottom line by earning $0.64 versus $0.39 in the prior year. For the next year, the market is expecting a contraction of 7.0% in earnings ($0.60 versus $0.64).
- MNI has underperformed the S&P 500 Index, declining 21.04% 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.
-- Written by a member of TheStreet Ratings Staff