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." PBF Energy Inc Class A (NYSE: PBF) shares currently have a dividend yield of 5.00%. PBF Energy Inc., together with its subsidiaries, engages in the refining and supply of petroleum products. The company has a P/E ratio of 20.51. The average volume for PBF Energy Inc Class A has been 1,059,900 shares per day over the past 30 days. PBF Energy Inc Class A has a market cap of $1.3 billion and is part of the energy industry. Shares are down 22.7% year-to-date as of the close of trading on Thursday. TheStreet Ratings rates PBF Energy Inc Class A as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins. Highlights from the ratings report include:
- The share price of PBF ENERGY INC has not done very well: it is down 21.42% 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.
- PBF, with its decline in revenue, slightly underperformed the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 9.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.39, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for PBF ENERGY INC is currently extremely low, coming in at 0.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.40% trails that of the industry average.
- You can view the full PBF Energy Inc Class A Ratings Report.