Martha Stewart Living Omnimedia (MSO) Upgraded From Sell to Hold

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc., or any of its contributors.  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.

NEW YORK (TheStreet) -- Martha Stewart Living Omnimedia  (MSO) has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C-.  TheStreet Ratings Team has this to say about their recommendation:

"We rate MARTHA STEWART LIVING OMNIMD (MSO) 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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MSO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, MSO has a quick ratio of 2.15, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for MARTHA STEWART LIVING OMNIMD is rather high; currently it is at 66.14%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.52% is above that of the industry average.
  • MARTHA STEWART LIVING OMNIMD reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MARTHA STEWART LIVING OMNIMD reported poor results of -$0.09 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.09).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has decreased by 1.9% when compared to the same quarter one year ago, dropping from $6.98 million to $6.84 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Media industry and the overall market, MARTHA STEWART LIVING OMNIMD's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MSO Ratings Report