Enersis SA Stock Downgraded (ENI)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

NEW YORK ( TheStreet) -- Enersis (NYSE: ENI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has decreased to $540.47 million or 26.07% 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Electric Utilities industry and the overall market, ENERSIS SA's return on equity is below that of both the industry average and the S&P 500.

Enersis S.A., an electric utility company, engages in the electricity generation, transmission, and distribution businesses in Chile, Argentina, Brazil, Colombia, and Peru. The company has a P/E ratio of 11.5, below the average utilities industry P/E ratio of 17.1 and below the S&P 500 P/E ratio of 17.7. Enersis has a market cap of $11.38 billion and is part of the utilities sector and utilities industry. Shares are down 3% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff
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