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."Arc Logistics Partners Dividend Yield: 13.80% Arc Logistics Partners (NYSE: ARCX) shares currently have a dividend yield of 13.80%. Arc Logistics Partners LP engages in the terminalling, storage, throughput, and transloading of crude oil and petroleum products. The company has a P/E ratio of 32.59. The average volume for Arc Logistics Partners has been 21,300 shares per day over the past 30 days. Arc Logistics Partners has a market cap of $244.7 million and is part of the energy industry. Shares are down 4.5% year-to-date as of the close of trading on Tuesday. 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 Arc Logistics Partners as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- ARCX'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 40.98%, 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. 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.
- ARCX's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.03 is sturdy.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ARC LOGISTICS PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for ARC LOGISTICS PARTNERS LP is rather high; currently it is at 68.39%. It has increased significantly from the same period last year. Along with this, the net profit margin of 7.73% is above that of the industry average.
- Net operating cash flow has significantly increased by 50.44% to $8.80 million when compared to the same quarter last year. In addition, ARC LOGISTICS PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -38.88%.
- You can view the full Arc Logistics Partners Ratings Report.
- INSTITUTIONAL FINANCIAL MKTS 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, INSTITUTIONAL FINANCIAL MKTS reported poor results of -$0.28 versus -$0.17 in the prior year.
- 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 Capital Markets industry. The net income has significantly decreased by 191.4% when compared to the same quarter one year ago, falling from $2.89 million to -$2.64 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 Capital Markets industry and the overall market, INSTITUTIONAL FINANCIAL MKTS's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $3.83 million or 22.10% 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 INSTITUTIONAL FINANCIAL MKTS has not done very well: it is down 24.49% 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.
- You can view the full Institutional Financial Markets Ratings Report.
- CELP'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 40.69%, 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.
- The debt-to-equity ratio is very high at 4.59 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 6.83, which shows the ability to cover short-term cash needs.
- The gross profit margin for CYPRESS ENERGY PARTNERS LP is currently extremely low, coming in at 11.63%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.78% trails the industry average.
- 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 Commercial Services & Supplies industry and the overall market, CYPRESS ENERGY PARTNERS LP's return on equity is below that of both the industry average and the S&P 500.
- CELP, with its decline in revenue, underperformed when compared the industry average of 2.1%. Since the same quarter one year prior, revenues fell by 12.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full Cypress Energy Partners Ratings Report.
- Our dividend calendar.