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NEW YORK (TheStreet) -- Copel-Cia Paranaense Energia (ELP) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate COPEL-CIA PARANAENSE ENERGIA (ELP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ELP's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 69.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, ELP has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
- COPEL-CIA PARANAENSE ENERGIA has improved earnings per share by 11.1% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, COPEL-CIA PARANAENSE ENERGIA increased its bottom line by earning $3.53 versus $2.67 in the prior year. For the next year, the market is expecting a contraction of 50.8% in earnings ($1.74 versus $3.53).
- The gross profit margin for COPEL-CIA PARANAENSE ENERGIA is currently extremely low, coming in at 14.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.05% trails that of the industry average.
- Net operating cash flow has significantly decreased to $220.19 million or 50.05% 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 analysis from the report here: ELP Ratings Report
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