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 "Sell." Artisan Partners Asset Management Dividend Yield: 4.30% Artisan Partners Asset Management (NYSE: APAM) shares currently have a dividend yield of 4.30%. Artisan Partners Asset Management Inc. provides investment management services in the United States and internationally. It offers 12 equity investment strategies spanning various market capitalization segments and investing styles. The average volume for Artisan Partners Asset Management has been 340,000 shares per day over the past 30 days. Artisan Partners Asset Management has a market cap of $1.7 billion and is part of the financial services industry. Shares are down 20.5% year-to-date as of the close of trading on Wednesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreet Ratings rates Artisan Partners Asset Management as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- In its most recent trading session, APAM 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ARTISAN PARTNERS ASSET MGMT has improved earnings per share by 10.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARTISAN PARTNERS ASSET MGMT reported poor results of -$1.95 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus -$1.95).
- Compared to other companies in the Capital Markets industry and the overall market, ARTISAN PARTNERS ASSET MGMT's return on equity significantly trails that of both the industry average and the S&P 500.
- 39.12% is the gross profit margin for ARTISAN PARTNERS ASSET MGMT which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.23% trails the industry average.
- Net operating cash flow has increased to $87.89 million or 16.39% when compared to the same quarter last year. In addition, ARTISAN PARTNERS ASSET MGMT has also vastly surpassed the industry average cash flow growth rate of -89.07%.
- You can view the full Artisan Partners Asset Management Ratings Report.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PBF ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for PBF ENERGY INC is currently extremely low, coming in at 2.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.39% trails that of the industry average.
- PBF ENERGY 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PBF ENERGY INC reported lower earnings of $1.35 versus $37.61 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $1.35).
- In its most recent trading session, PBF 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PBF's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
- You can view the full PBF Energy Ratings Report.
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 97.3% when compared to the same quarter one year ago, falling from $85.60 million to $2.29 million.
- The debt-to-equity ratio is very high at 3.81 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, XCO has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $67.79 million or 47.04% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 97.50% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, EXCO RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full EXCO Resources Ratings Report.
- Our dividend calendar.