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 which could 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 3 stocks with substantial yields, that ultimately, we have rated "Hold." PBF Energy (NYSE: PBF) shares currently have a dividend yield of 4.10%. PBF Energy Inc., together with its subsidiaries, is engaged in the refining and supply of petroleum products. The company has a P/E ratio of 22.65. The average volume for PBF Energy has been 1,312,800 shares per day over the past 30 days. PBF Energy has a market cap of $2.0 billion and is part of the energy industry. Shares are down 6.2% year-to-date as of the close of trading on Wednesday. TheStreet Ratings rates PBF Energy as a hold. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity. Highlights from the ratings report include:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- PBF ENERGY INC 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. 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, PBF ENERGY INC reported lower earnings of $1.35 versus $37.61 in the prior year. This year, the market expects an improvement in earnings ($2.86 versus $1.35).
- Net operating cash flow has significantly decreased to $148.75 million or 56.71% 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 PBF ENERGY INC has not done very well: it is down 10.22% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full PBF Energy Ratings Report.
- Compared to other companies in the Metals & Mining industry and the overall market, HI-CRUSH PARTNERS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- HCLP's very impressive revenue growth greatly exceeded the industry average of 7.6%. Since the same quarter one year prior, revenues leaped by 217.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HCLP's debt-to-equity ratio of 0.94 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.17 is very high and demonstrates very strong liquidity.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 92.1% when compared to the same quarter one year prior, rising from $9.40 million to $18.06 million.
- Net operating cash flow has declined marginally to $11.28 million or 3.55% when compared to the same quarter last year. Despite a decrease in cash flow HI-CRUSH PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -39.42%.
- You can view the full Hi-Crush Partners Ratings Report.
- HTA's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HEALTHCARE TRUST OF AMERICA reported significant earnings per share improvement 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HEALTHCARE TRUST OF AMERICA turned its bottom line around by earning $0.11 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus $0.11).
- The gross profit margin for HEALTHCARE TRUST OF AMERICA is rather low; currently it is at 17.59%. Regardless of HTA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HTA's net profit margin of 4.85% is significantly lower than the industry average.
- Net operating cash flow has decreased to $29.15 million or 11.62% 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.
- You can view the full Healthcare Trust of America Ratings Report.
- Our dividend calendar.