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."Regal Entertainment Group Dividend Yield: 4.50% Regal Entertainment Group (NYSE: RGC) shares currently have a dividend yield of 4.50%. Regal Entertainment Group, through its subsidiaries, operates as a motion picture exhibitor in the United States. It develops, acquires, and operates multi-screen theatres primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets. The company has a P/E ratio of 20.91. The average volume for Regal Entertainment Group has been 1,038,800 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $2.6 billion and is part of the media industry. Shares are down 8.7% year-to-date as of the close of trading on Thursday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates Regal Entertainment Group as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including poor profit margins, unimpressive growth in net income and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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.
- REGAL ENTERTAINMENT GROUP's earnings per share declined by 17.6% in the most recent quarter compared to the same quarter a year ago. 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, REGAL ENTERTAINMENT GROUP reported lower earnings of $0.68 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $0.68).
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Media industry average. The net income has decreased by 18.0% when compared to the same quarter one year ago, dropping from $26.70 million to $21.90 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, RGC has underperformed the S&P 500 Index, declining 11.05% from its price level of one year ago. 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 gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 18.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.02% trails that of the industry average.
- You can view the full Regal Entertainment Group Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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 debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, PDLI has a quick ratio of 2.50, which demonstrates the ability of the company to cover short-term liquidity needs.
- PDL BIOPHARMA INC's earnings per share declined by 9.6% 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, PDL BIOPHARMA INC increased its bottom line by earning $1.89 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $1.89).
- Looking at the price performance of PDLI's shares over the past 12 months, there is not much good news to report: the stock is down 45.40%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $92.06 million to $78.26 million.
- You can view the full PDL BioPharma Ratings Report.
- CVX's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- CVX, with its decline in revenue, slightly underperformed the industry average of 37.0%. Since the same quarter one year prior, revenues fell by 37.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $5,360.00 million or 38.24% 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.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Chevron Ratings Report.
- Our dividend calendar.