3 Stocks Reiterated As A Hold: GOOG, IBM, XOM

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.

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated 3 stocks with a hold rating on Friday based on 32 different data factors including general market action, fundamental analysis and technical indicators. The in-depth analysis of these ratings decisions goes as follows:

Google Inc:

Google (Nasdaq: GOOG) has been reiterated by TheStreet Ratings as a hold with a ratings score of C-. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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Highlights from the ratings report include:
  • GOOG's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 11.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • GOOG's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.28, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • GOOGLE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, GOOGLE INC reported lower earnings of $20.22 versus $39.38 in the prior year. This year, the market expects an improvement in earnings ($28.35 versus $20.22).
  • 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 Internet Software & Services industry and the overall market on the basis of return on equity, GOOGLE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

Google Inc., a technology company, builds products and provides services to organize the information. Google has a market cap of $187.6 billion and is part of the technology sector and internet industry. Shares are up 4.3% year-to-date as of the close of trading on Thursday.

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International Business Machines Corp:

International Business Machines (NYSE: IBM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

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Highlights from the ratings report include:
  • INTL BUSINESS MACHINES CORP has improved earnings per share by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INTL BUSINESS MACHINES CORP increased its bottom line by earning $15.68 versus $15.37 in the prior year. This year, the market expects an improvement in earnings ($15.86 versus $15.68).
  • 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 IT Services industry and the overall market, INTL BUSINESS MACHINES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 48.71% is the gross profit margin for INTL BUSINESS MACHINES CORP which we consider to be strong. Regardless of IBM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.88% trails the industry average.
  • The debt-to-equity ratio is very high at 3.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, IBM's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.
  • IBM has underperformed the S&P 500 Index, declining 11.21% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

International Business Machines Corporation provides information technology (IT) products and services worldwide. International Business Machines has a market cap of $171.7 billion and is part of the technology sector and computer software & services industry. Shares are up 8.7% year-to-date as of the close of trading on Thursday.

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Exxon Mobil Corporation:

Exxon Mobil Corporation (NYSE: XOM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and disappointing return on equity.

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Highlights from the ratings report include:
  • XOM's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that XOM's debt-to-equity ratio is low, the quick ratio, which is currently 0.51, displays a potential problem in covering short-term cash needs.
  • XOM, with its decline in revenue, slightly underperformed the industry average of 20.3%. Since the same quarter one year prior, revenues fell by 22.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for EXXON MOBIL CORP is rather low; currently it is at 17.91%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.63% is above that of the industry average.
  • Net operating cash flow has decreased to $7,415.00 million or 27.36% 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.

Exxon Mobil Corporation explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. Exxon Mobil has a market cap of $368.1 billion and is part of the basic materials sector and energy industry. Shares are down 5% year-to-date as of the close of trading on Thursday.

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