What To Sell: 3 Sell-Rated Dividend Stocks MUX, CMLP, KRO

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 "Sell."

McEwen Mining

Dividend Yield: 10.40%

McEwen Mining (NYSE: MUX) shares currently have a dividend yield of 10.40%.

McEwen Mining Inc. explores for, develops, produces, and sells precious and base metals in Argentina, Mexico, and the United States. It primarily explores for gold, silver, and copper.

The average volume for McEwen Mining has been 907,400 shares per day over the past 30 days. McEwen Mining has a market cap of $263.1 million and is part of the metals & mining industry. Shares are down 17.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates McEwen Mining as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, MCEWEN MINING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MUX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 64.99%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MCEWEN MINING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MCEWEN MINING INC reported poor results of -$1.04 versus -$0.50 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$1.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 86.4% when compared to the same quarter one year prior, rising from -$104.02 million to -$14.12 million.
  • Net operating cash flow has significantly increased by 110.95% to $0.35 million when compared to the same quarter last year. In addition, MCEWEN MINING INC has also vastly surpassed the industry average cash flow growth rate of -41.10%.

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Crestwood Midstream Partners

Dividend Yield: 19.20%

Crestwood Midstream Partners (NYSE: CMLP) shares currently have a dividend yield of 19.20%.

Crestwood Midstream Partners LP provides gathering, processing, storage, and transportation solutions to customers in the crude oil, natural gas liquids (NGL), and natural gas sectors of the energy industry in the United States.

The average volume for Crestwood Midstream Partners has been 687,700 shares per day over the past 30 days. Crestwood Midstream Partners has a market cap of $1.6 billion and is part of the energy industry. Shares are down 48.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Crestwood Midstream Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 698.8% when compared to the same quarter one year ago, falling from $8.00 million to -$47.90 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 Oil, Gas & Consumable Fuels industry and the overall market, CRESTWOOD MIDSTREAM PTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CRESTWOOD MIDSTREAM PTNRS LP is rather low; currently it is at 21.74%. Regardless of CMLP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CMLP's net profit margin of -10.01% significantly underperformed when compared to the industry average.
  • CRESTWOOD MIDSTREAM PTNRS LP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, CRESTWOOD MIDSTREAM PTNRS LP reported poor results of -$0.46 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings (-$0.26 versus -$0.46).
  • This stock's share value has moved by only 65.20% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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Kronos Worldwide

Dividend Yield: 7.70%

Kronos Worldwide (NYSE: KRO) shares currently have a dividend yield of 7.70%.

Kronos Worldwide, Inc. produces and markets titanium dioxide pigments (TiO2) worldwide. The company has a P/E ratio of 20.59.

The average volume for Kronos Worldwide has been 302,800 shares per day over the past 30 days. Kronos Worldwide has a market cap of $906.2 million and is part of the chemicals industry. Shares are down 42.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Kronos Worldwide as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Chemicals industry. The net income has significantly decreased by 582.8% when compared to the same quarter one year ago, falling from $33.10 million to -$159.80 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, KRONOS WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KRONOS WORLDWIDE INC is rather low; currently it is at 18.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -44.36% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $18.30 million or 17.93% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 51.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 575.86% 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.

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