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"We rate TIM PARTICIPACOES SA (TSU) 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 expanding profit margins, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for TIM PARTICIPACOES SA is rather high; currently it is at 59.95%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TSU's net profit margin of 6.98% significantly trails 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 22.5% when compared to the same quarter one year ago, dropping from $140.28 million to $108.70 million.
- Net operating cash flow has decreased to $695.19 million or 27.37% 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: TSU Ratings Report