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. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate TIM PARTICIPACOES SA (TSU) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $1,428.11 million or 7.71% when compared to the same quarter last year. In addition, TIM PARTICIPACOES SA has also modestly surpassed the industry average cash flow growth rate of -1.03%.
- The gross profit margin for TIM PARTICIPACOES SA is rather high; currently it is at 59.59%. 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 9.28% trails the industry average.
- TIM PARTICIPACOES SA's earnings per share declined by 23.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TIM PARTICIPACOES SA reported lower earnings of $1.21 versus $1.32 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $1.21).
- The revenue fell significantly faster than the industry average of 61.9%. Since the same quarter one year prior, revenues fell by 17.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.14 is sturdy.
- You can view the full analysis from the report here: TSU Ratings Report