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." Greenhill (NYSE: GHL) shares currently have a dividend yield of 4.10%. Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company provides financial advice on mergers, acquisitions, restructurings, financings, and capital raising. The company has a P/E ratio of 39.77. The average volume for Greenhill has been 490,500 shares per day over the past 30 days. Greenhill has a market cap of $1.2 billion and is part of the financial services industry. Shares are down 23.9% year-to-date as of the close of trading on Friday. TheStreet Ratings rates Greenhill as a hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and premium valuation. Highlights from the ratings report include:
- Net operating cash flow has increased to $22.38 million or 38.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.20%.
- The revenue fell significantly faster than the industry average of 5.1%. Since the same quarter one year prior, revenues fell by 45.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- GREENHILL & CO 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. 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, GREENHILL & CO INC increased its bottom line by earning $1.56 versus $1.38 in the prior year. For the next year, the market is expecting a contraction of 1.9% in earnings ($1.53 versus $1.56).
- 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 Capital Markets industry. The net income has significantly decreased by 98.3% when compared to the same quarter one year ago, falling from $13.62 million to $0.24 million.
- The share price of GREENHILL & CO INC has not done very well: it is down 7.85% 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, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Greenhill Ratings Report.
- RRD's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
- 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. Compared to other companies in the Commercial Services & Supplies industry and the overall market, DONNELLEY (R R) & SONS CO's return on equity exceeds that of both the industry average and the S&P 500.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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 Commercial Services & Supplies industry. The net income has significantly decreased by 207.0% when compared to the same quarter one year ago, falling from $27.10 million to -$29.00 million.
- The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 21.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.08% trails that of the industry average.
- You can view the full RR Donnelley & Sons Ratings Report.
- Compared to its closing price of one year ago, CM's share price has jumped by 29.84%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 72.28%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CM's net profit margin of 7.76% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Commercial Banks industry. The net income has significantly decreased by 63.1% when compared to the same quarter one year ago, falling from $860.00 million to $317.00 million.
- Net operating cash flow has significantly decreased to -$2,201.00 million or 1036.59% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Canadian Imperial Bank of Commerce Ratings Report.
- Our dividend calendar.