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."Medallion Financial Dividend Yield: 11.00% Medallion Financial (NASDAQ: TAXI) shares currently have a dividend yield of 11.00%. Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. The company has a P/E ratio of 7.57. The average volume for Medallion Financial has been 150,000 shares per day over the past 30 days. Medallion Financial has a market cap of $221.1 million and is part of the financial services industry. Shares are up 27.8% year-to-date as of the close of trading on Wednesday. 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 Medallion Financial as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The gross profit margin for MEDALLION FINANCIAL CORP is rather high; currently it is at 62.25%. It has increased significantly from the same period last year. Along with this, the net profit margin of 73.89% significantly outperformed against the industry average.
- TAXI, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 13.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- MEDALLION FINANCIAL CORP's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MEDALLION FINANCIAL CORP increased its bottom line by earning $1.20 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 5.4% in earnings ($1.14 versus $1.20).
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TAXI has underperformed the S&P 500 Index, declining 16.61% 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.
- You can view the full Medallion Financial Ratings Report.
- TAL's revenue growth has slightly outpaced the industry average of 4.6%. 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 gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 81.76%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAL's net profit margin of 7.93% compares favorably to the industry average.
- The debt-to-equity ratio is very high at 4.84 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Net operating cash flow has declined marginally to $88.25 million or 9.16% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TAL INTERNATIONAL GROUP INC has marginally lower results.
- You can view the full TAL International Group Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 56.4% when compared to the same quarter one year prior, rising from $4.37 million to $6.84 million.
- 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARTIN MIDSTREAM PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 41.17% compared to 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 debt-to-equity ratio is very high at 2.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MMLP maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
- You can view the full Martin Midstream Partners Ratings Report.
- Our dividend calendar.