What To Hold: 3 Hold-Rated Dividend Stocks TKC, ELRC, CPG

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

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."

Turkcell Iletisim Hizmetleri AS

Dividend Yield: 14.50%

Turkcell Iletisim Hizmetleri AS (NYSE: TKC) shares currently have a dividend yield of 14.50%.

Turkcell Iletisim Hizmetleri AS establishes and operates a Global System for Mobile Communications (GSM) network in Turkey and regional states. It operates in four segments: Turkcell, Euroasia, Belarusian Telecom, and Superonline. The company has a P/E ratio of 8.46.

The average volume for Turkcell Iletisim Hizmetleri AS has been 484,700 shares per day over the past 30 days. Turkcell Iletisim Hizmetleri AS has a market cap of $10.4 billion and is part of the telecommunications industry. Shares are down 23.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Turkcell Iletisim Hizmetleri AS as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • TKC's debt-to-equity ratio is very low at 0.22 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 2.57, which clearly demonstrates the ability to cover short-term cash needs.
  • 48.91% is the gross profit margin for TURKCELL ILETISIM HIZMET which we consider to be strong. Regardless of TKC'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 8.45% trails the industry average.
  • TURKCELL ILETISIM HIZMET has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TURKCELL ILETISIM HIZMET reported lower earnings of $0.98 versus $1.40 in the prior year. For the next year, the market is expecting a contraction of 4.1% in earnings ($0.94 versus $0.98).
  • 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 significantly decreased by 53.7% when compared to the same quarter one year ago, falling from $253.99 million to $117.53 million.

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Electro Rent

Dividend Yield: 7.80%

Electro Rent (NASDAQ: ELRC) shares currently have a dividend yield of 7.80%.

Electro Rent Corporation rents, leases, and sells new and used electronic test and measurement equipment primarily for use in the aerospace, defense, telecommunications, electronics, industrial, and semiconductor industries in the United States and internationally. The company has a P/E ratio of 15.16.

The average volume for Electro Rent has been 85,700 shares per day over the past 30 days. Electro Rent has a market cap of $248.5 million and is part of the diversified services industry. Shares are down 28.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Electro Rent as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • ELRC 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.
  • The gross profit margin for ELECTRO RENT CORP is rather high; currently it is at 57.15%. Regardless of ELRC'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 4.30% 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 46.5% when compared to the same quarter one year ago, falling from $4.54 million to $2.43 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ELECTRO RENT CORP's return on equity is below that of both the industry average and the S&P 500.

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Crescent Point Energy

Dividend Yield: 9.70%

Crescent Point Energy (NYSE: CPG) shares currently have a dividend yield of 9.70%.

Crescent Point Energy Corp. acquires, explores, develops, and produces oil and natural gas properties in Western Canada and the United States. The company has a P/E ratio of 28.67.

The average volume for Crescent Point Energy has been 315,800 shares per day over the past 30 days. Crescent Point Energy has a market cap of $10.6 billion and is part of the energy industry. Shares are up 2.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Crescent Point Energy as a hold. 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.3%. Since the same quarter one year prior, revenues rose by 11.1%. 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.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that CPG'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.
  • CRESCENT POINT ENERGY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CRESCENT POINT ENERGY CORP increased its bottom line by earning $1.19 versus $0.38 in the prior year.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.18%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 225.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 249.1% when compared to the same quarter one year ago, falling from $30.89 million to -$46.06 million.

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