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) -- McClatchy (NYSE: MNI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and unimpressive growth in net income.
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- The debt-to-equity ratio is very high at 6.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MNI maintains a poor quick ratio of 0.98, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has significantly decreased to $27.63 million or 56.42% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The change in net income from the same quarter one year ago has exceeded that of the Media industry average, but is less than that of the S&P 500. The net income has decreased by 24.3% when compared to the same quarter one year ago, dropping from -$12.74 million to -$15.84 million.
- Compared to its closing price of one year ago, MNI's share price has jumped by 110.80%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Media industry and the overall market, MCCLATCHY CO's return on equity is below that of both the industry average and the S&P 500.