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 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 "Buy."B&G Foods (NYSE: BGS) shares currently have a dividend yield of 4.20%. B&G Foods, Inc. manufactures, sells, and distributes shelf-stable food and household products in the United States, Canada, and Puerto Rico. The company has a P/E ratio of 34.20. The average volume for B&G Foods has been 361,100 shares per day over the past 30 days. B&G Foods has a market cap of $1.7 billion and is part of the food & beverage industry. Shares are down 6.3% year-to-date as of the close of trading on Thursday. TheStreet Ratings rates B&G Foods as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 15.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $31.00 million or 34.17% when compared to the same quarter last year. In addition, B&G FOODS INC has also vastly surpassed the industry average cash flow growth rate of -25.75%.
- B&G FOODS INC's earnings per share declined by 10.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, B&G FOODS INC reported lower earnings of $0.98 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.98).
- In its most recent trading session, BGS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The gross profit margin for B&G FOODS INC is currently lower than what is desirable, coming in at 34.48%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.97% is above that of the industry average.
- You can view the full B&G Foods Ratings Report.
- The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, AB's net profit margin of 87.40% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 50.43% to $63.46 million when compared to the same quarter last year. Despite an increase in cash flow of 50.43%, ALLIANCEBERNSTEIN HOLDING LP is still growing at a significantly lower rate than the industry average of 162.25%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, ALLIANCEBERNSTEIN HOLDING LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.1%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- ALLIANCEBERNSTEIN HOLDING LP reported flat earnings per share in the most recent quarter. 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, ALLIANCEBERNSTEIN HOLDING LP increased its bottom line by earning $1.72 versus $0.50 in the prior year. This year, the market expects earnings to be in line with last year ($1.72 versus $1.72).
- You can view the full AllianceBernstein Holding L.P Ratings Report.
- Compared to other companies in the Biotechnology industry and the overall market, PDL BIOPHARMA INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- PDLI's revenue growth has slightly outpaced the industry average of 25.9%. Since the same quarter one year prior, revenues rose by 28.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PDL BIOPHARMA INC has improved earnings per share by 14.7% 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. During the past fiscal year, PDL BIOPHARMA INC increased its bottom line by earning $1.73 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.73).
- Net operating cash flow has increased to $61.21 million or 18.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -30.98%.
- The gross profit margin for PDL BIOPHARMA INC is currently very high, coming in at 87.75%. Regardless of PDLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDLI's net profit margin of 55.46% significantly outperformed against the industry.
- You can view the full PDL BioPharma Ratings Report.
- Our dividend calendar.