5 Sell-Rated Dividend Stocks: LRE, EBR.B, TEU, EBR, RNF

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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 5 stocks with substantial yields, that ultimately, we have rated "Sell."

LRR Energy

Dividend Yield: 12.80%

LRR Energy (NYSE: LRE) shares currently have a dividend yield of 12.80%.

LRR Energy, L.P., through its subsidiary, LRE Operating, LLC, engages in the acquisition, exploitation, development, and operation of oil and natural gas properties in North America.

The average volume for LRR Energy has been 217,500 shares per day over the past 30 days. LRR Energy has a market cap of $293.7 million and is part of the energy industry. Shares are down 14.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates LRR Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 240.1% when compared to the same quarter one year ago, falling from $5.32 million to -$7.45 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LRR ENERGY LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $9.85 million or 36.58% 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 share price of LRR ENERGY LP has not done very well: it is down 8.39% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • LRR ENERGY LP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LRR ENERGY LP reported lower earnings of $0.00 versus $2.42 in the prior year. This year, the market expects an increase in earnings to $0.21 from $0.00.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Centrais Eletricas Brasileiras

Dividend Yield: 16.90%

Centrais Eletricas Brasileiras (NYSE: EBR.B) shares currently have a dividend yield of 16.90%.

Centrais Eletricas Brasileiras S.A. Eletrobras, together with its subsidiaries, engages in the generation, transmission, and distribution of electricity in Brazil. It projects, builds, and operates generating power plants, and electric power transmission and distribution lines. The company has a P/E ratio of 1.57.

The average volume for Centrais Eletricas Brasileiras has been 289,700 shares per day over the past 30 days. Centrais Eletricas Brasileiras has a market cap of $5.5 billion and is part of the utilities industry. Shares are down 18.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Centrais Eletricas Brasileiras as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Electric Utilities industry. The net income has significantly decreased by 102.5% when compared to the same quarter one year ago, falling from $696.49 million to -$17.71 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electric Utilities industry and the overall market, ELETROBRAS-CENTR ELETR BRAS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ELETROBRAS-CENTR ELETR BRAS is currently extremely low, coming in at 0.31%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.61% trails that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.57%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 101.92% 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.
  • ELETROBRAS-CENTR ELETR BRAS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ELETROBRAS-CENTR ELETR BRAS swung to a loss, reporting -$2.48 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus -$2.48).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Box Ships

Dividend Yield: 12.10%

Box Ships (NYSE: TEU) shares currently have a dividend yield of 12.10%.

Box Ships Inc., a shipping company, engages in the seaborne transportation of containers worldwide. As of December 31, 2012, it had a fleet of 9 containerships with a total capacity of approximately 43,925 twenty-foot equivalent units. The company has a P/E ratio of 5.75.

The average volume for Box Ships has been 149,000 shares per day over the past 30 days. Box Ships has a market cap of $99.1 million and is part of the transportation industry. Shares are down 2.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates Box Ships as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • BOX SHIPS INC's earnings per share declined by 48.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, BOX SHIPS INC reported lower earnings of $0.67 versus $0.80 in the prior year.
  • 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 Marine industry. The net income has decreased by 13.8% when compared to the same quarter one year ago, dropping from $4.66 million to $4.02 million.
  • 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 Marine industry and the overall market, BOX SHIPS INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.86%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 48.27% 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 debt-to-equity ratio is somewhat low, currently at 0.88, 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 0.90 is somewhat weak and could be cause for future problems.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Centrais Eletricas Brasileiras

Dividend Yield: 7.60%

Centrais Eletricas Brasileiras (NYSE: EBR) shares currently have a dividend yield of 7.60%.

Centrais Eletricas Brasileiras S.A. Eletrobras, together with its subsidiaries, engages in the generation, transmission, and distribution of electricity in Brazil. It projects, builds, and operates generating power plants, and electric power transmission and distribution lines.

The average volume for Centrais Eletricas Brasileiras has been 1,079,500 shares per day over the past 30 days. Centrais Eletricas Brasileiras has a market cap of $3.0 billion and is part of the utilities industry. Shares are down 29.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Centrais Eletricas Brasileiras as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Electric Utilities industry. The net income has significantly decreased by 102.5% when compared to the same quarter one year ago, falling from $696.49 million to -$17.71 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electric Utilities industry and the overall market, ELETROBRAS-CENTR ELETR BRAS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ELETROBRAS-CENTR ELETR BRAS is currently extremely low, coming in at 0.31%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.61% trails that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 66.05%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 101.92% 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.
  • ELETROBRAS-CENTR ELETR BRAS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ELETROBRAS-CENTR ELETR BRAS swung to a loss, reporting -$2.48 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus -$2.48).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Rentech Nitrogen Partners

Dividend Yield: 11.10%

Rentech Nitrogen Partners (NYSE: RNF) shares currently have a dividend yield of 11.10%.

Rentech Nitrogen Partners, L.P. engages in the manufacture and sale of nitrogen fertilizer products for use in the United States. The company operates in two segments, East Dubuque and Pasadena. The company has a P/E ratio of 11.59.

The average volume for Rentech Nitrogen Partners has been 191,900 shares per day over the past 30 days. Rentech Nitrogen Partners has a market cap of $1.2 billion and is part of the chemicals industry. Shares are down 14.7% year to date as of the close of trading on Monday.

TheStreet Ratings rates Rentech Nitrogen Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 decreased by 22.5% when compared to the same quarter one year ago, dropping from $19.37 million to $15.01 million.
  • The debt-to-equity ratio is very high at 2.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, RNF has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $22.17 million or 37.72% when compared to the same quarter last year. Despite a decrease in cash flow RENTECH NITROGEN PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -69.14%.
  • RENTECH NITROGEN PARTNERS LP's earnings per share declined by 25.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RENTECH NITROGEN PARTNERS LP increased its bottom line by earning $2.78 versus $0.36 in the prior year. For the next year, the market is expecting a contraction of 14.4% in earnings ($2.38 versus $2.78).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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