Royal Philips NV Stock Upgraded (PHG)

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) -- Royal Philips (NYSE: PHG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 1146.80% to $614.04 million when compared to the same quarter last year. In addition, KONINKLIJKE PHILIPS NV has also vastly surpassed the industry average cash flow growth rate of -72.51%.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.76 is somewhat weak and could be cause for future problems.
  • 46.82% is the gross profit margin for KONINKLIJKE PHILIPS NV which we consider to be strong. Regardless of PHG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.58% trails the industry average.
  • PHG, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Industrial Conglomerates industry and the overall market, KONINKLIJKE PHILIPS NV's return on equity is below that of both the industry average and the S&P 500.

Koninklijke Philips N.V. is engaged in healthcare, consumer lifestyle, and lighting businesses worldwide. Royal Philips has a market cap of $28.94 billion and is part of the consumer goods sector and consumer durables industry. Shares are down 14.4% year to date as of the close of trading on Wednesday.

You can view the full Royal Philips Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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