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. TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends and subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 4 stocks with substantial yields, that ultimately, we have rated "Hold."Ferrellgas Partners (NYSE: FGP) shares currently have a dividend yield of 10.30%. Ferrellgas Partners, L.P. engages in the distribution and sale of propane, and related equipment and supplies primarily in the United States. It transports propane to propane distribution locations, tanks on customers' premises, or to portable propane tanks delivered to retailers. The company has a P/E ratio of 60.62. The average volume for Ferrellgas Partners has been 245,600 shares per day over the past 30 days. Ferrellgas Partners has a market cap of $1.5 billion and is part of the energy industry. Shares are up 17.9% year to date as of the close of trading on Thursday. TheStreet Ratings rates Ferrellgas Partners as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- FERRELLGAS PARTNERS -LP has improved earnings per share by 48.9% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FERRELLGAS PARTNERS -LP continued to lose money by earning -$0.14 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$0.14).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 60.0% when compared to the same quarter one year prior, rising from $36.37 million to $58.21 million.
- FGP, with its decline in revenue, underperformed when compared the industry average of 3.2%. Since the same quarter one year prior, revenues fell by 20.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Powered by its strong earnings growth of 48.93% and other important driving factors, this stock has surged by 30.51% 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.
- The gross profit margin for FERRELLGAS PARTNERS -LP is rather low; currently it is at 19.60%. Regardless of FGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FGP's net profit margin of 8.83% compares favorably to the industry average.
- You can view the full Ferrellgas Partners Ratings Report.
- CLCT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CLCT has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Diversified Consumer Services industry and the overall market, COLLECTORS UNIVERSE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The gross profit margin for COLLECTORS UNIVERSE INC is rather high; currently it is at 61.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.84% trails the industry average.
- Net operating cash flow has significantly decreased to $0.72 million or 72.09% when compared to the same quarter last year. Despite a decrease in cash flow of 72.09%, COLLECTORS UNIVERSE INC is in line with the industry average cash flow growth rate of -74.11%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Diversified Consumer Services industry. The net income has significantly decreased by 48.3% when compared to the same quarter one year ago, falling from $1.09 million to $0.56 million.
- You can view the full Collectors Universe Ratings Report.
- MARPS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- The gross profit margin for MARINE PETROLEUM TRUST is currently very high, coming in at 100.00%. MARPS has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MARPS's net profit margin of 95.41% significantly outperformed against the industry.
- MARINE PETROLEUM TRUST's earnings per share declined by 38.8% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MARINE PETROLEUM TRUST increased its bottom line by earning $1.92 versus $1.59 in the prior year.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 49.49%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.77% compared to the year-earlier 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.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 38.0% when compared to the same quarter one year ago, falling from $0.97 million to $0.60 million.
- You can view the full Marine Petroleum Ratings Report.
- UAN's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.73, which clearly demonstrates the ability to cover short-term cash needs.
- 39.90% is the gross profit margin for CVR PARTNERS LP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, UAN's net profit margin of 22.68% compares favorably to the industry average.
- UAN, with its decline in revenue, underperformed when compared the industry average of 1.5%. Since the same quarter one year prior, revenues fell by 22.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 62.8% when compared to the same quarter one year ago, falling from $41.22 million to $15.33 million.
- Net operating cash flow has significantly decreased to $8.71 million or 72.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full CVR Partners Ratings Report.
- Our dividend calendar.