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. NEW YORK ( TheStreet) -- United States Cellular Corporation (NYSE: USM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- The gross profit margin for US CELLULAR CORP is rather high; currently it is at 60.52%. 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 -1.04% is in-line with the industry average.
- USM's share price has surged by 26.52% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Although USM had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- US CELLULAR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, US CELLULAR CORP reported lower earnings of $1.30 versus $2.06 in the prior year. For the next year, the market is expecting a contraction of 79.2% in earnings ($0.27 versus $1.30).
- 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 127.8% when compared to the same quarter one year ago, falling from $35.45 million to -$9.86 million.