What To Sell: 3 Sell-Rated Dividend Stocks MW, OUT, OXY

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."

Men's Wearhouse

Dividend Yield: 6.30%

Men's Wearhouse (NYSE: MW) shares currently have a dividend yield of 6.30%.

The Men's Wearhouse, Inc. operates as a specialty apparel retailer in the United States, Puerto Rico, and Canada. The company operates in two segments, Retail and Corporate Apparel.

The average volume for Men's Wearhouse has been 2,508,900 shares per day over the past 30 days. Men's Wearhouse has a market cap of $554.4 million and is part of the retail industry. Shares are down 27% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Men's Wearhouse as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Specialty Retail industry. The net income has significantly decreased by 499.7% when compared to the same quarter one year ago, falling from $6.79 million to -$27.15 million.
  • Currently the debt-to-equity ratio of 1.68 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.37, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Specialty Retail industry and the overall market, MENS WEARHOUSE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $17.32 million or 61.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 74.64%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 500.00% 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.

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Outfront Media

Dividend Yield: 6.40%

Outfront Media (NYSE: OUT) shares currently have a dividend yield of 6.40%.

OUTFRONT Media Inc. provides advertising space on out-of-home advertising structures and sites in the United States, Canada, and Latin America. The company has a P/E ratio of 40.58.

The average volume for Outfront Media has been 662,000 shares per day over the past 30 days. Outfront Media has a market cap of $2.9 billion and is part of the real estate industry. Shares are down 1.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Outfront Media as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • OUTFRONT MEDIA INC 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. For the next year, the market is expecting a contraction of 80.0% in earnings ($0.51 versus $2.55).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 91.5% when compared to the same quarter one year ago, falling from $248.30 million to $21.20 million.
  • Net operating cash flow has decreased to $102.30 million or 14.53% 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.
  • The share price of OUTFRONT MEDIA INC has not done very well: it is down 20.01% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • 43.63% is the gross profit margin for OUTFRONT MEDIA INC which we consider to be strong. Regardless of OUT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OUT's net profit margin of 5.48% is significantly lower than the industry average.

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Occidental Petroleum

Dividend Yield: 4.70%

Occidental Petroleum (NYSE: OXY) shares currently have a dividend yield of 4.70%.

Occidental Petroleum Corporation engages in the acquisition, exploration, and development of oil and gas properties in the United States and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing and Other.

The average volume for Occidental Petroleum has been 5,076,300 shares per day over the past 30 days. Occidental Petroleum has a market cap of $48.9 billion and is part of the energy industry. Shares are down 9.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Occidental Petroleum as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself 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 316.0% when compared to the same quarter one year ago, falling from $1,208.00 million to -$2,609.00 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 Oil, Gas & Consumable Fuels industry and the overall market, OCCIDENTAL PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $1,020.00 million or 61.33% 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.
  • The share price of OCCIDENTAL PETROLEUM CORP has not done very well: it is down 15.21% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • OCCIDENTAL PETROLEUM 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. 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, OCCIDENTAL PETROLEUM CORP swung to a loss, reporting -$0.27 versus $7.35 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$0.27).

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