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) -- Walter Investment Management (NYSE: WAC) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.
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- Net operating cash flow has significantly decreased to -$2.66 million or 104.02% 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, WALTER INVESTMENT MGMT CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- This stock has increased by 48.96% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- 48.70% is the gross profit margin for WALTER INVESTMENT MGMT CORP which we consider to be strong. Regardless of WAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WAC's net profit margin of 3.98% is significantly lower than the industry average.
- WALTER INVESTMENT MGMT CORP 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, WALTER INVESTMENT MGMT CORP swung to a loss, reporting -$2.44 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($4.75 versus -$2.44).
-- Written by a member of TheStreet Ratings Staff