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NEW YORK (TheStreet) -- Philippine Long Distance Telephone Company (PHI) 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 PLDT-PHILIPPINE LNG DIST TEL (PHI) 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 notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, PLDT-PHILIPPINE LNG DIST TEL's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 45.24% is the gross profit margin for PLDT-PHILIPPINE LNG DIST TEL which we consider to be strong. Regardless of PHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PHI's net profit margin of 18.68% is significantly lower than the industry average.
- 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 Wireless Telecommunication Services industry. The net income has decreased by 23.5% when compared to the same quarter one year ago, dropping from $213.98 million to $163.64 million.
- The debt-to-equity ratio of 1.08 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.34, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full analysis from the report here: PHI Ratings Report