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."World Point Terminals Dividend Yield: 7.60% World Point Terminals (NYSE: WPT) shares currently have a dividend yield of 7.60%. World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 16.19. The average volume for World Point Terminals has been 28,800 shares per day over the past 30 days. World Point Terminals has a market cap of $553.2 million and is part of the energy industry. Shares are up 16.3% year-to-date as of the close of trading on Friday. 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 World Point Terminals as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow. Highlights from the ratings report include:
- WPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.14, which clearly demonstrates the ability to cover short-term cash needs.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WORLD POINT TERMINALS's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- Despite the weak revenue results, WPT has outperformed against the industry average of 24.6%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- WPT has underperformed the S&P 500 Index, declining 6.65% 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.
- Net operating cash flow has decreased to $11.58 million or 10.04% when compared to the same quarter last year. Despite a decrease in cash flow WORLD POINT TERMINALS is still fairing well by exceeding its industry average cash flow growth rate of -49.84%.
- You can view the full World Point Terminals Ratings Report.
- The gross profit margin for TEXTAINER GROUP HOLDINGS LTD is currently very high, coming in at 84.75%. Regardless of TGH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.63% trails the industry average.
- TGH, with its decline in revenue, underperformed when compared the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, TEXTAINER GROUP HOLDINGS LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $70.58 million or 20.66% 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.
- You can view the full Textainer Group Holdings Ratings Report.
- Compared to other companies in the Gas Utilities industry and the overall market, FERRELLGAS PARTNERS -LP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite the weak revenue results, FGP has outperformed against the industry average of 19.9%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for FERRELLGAS PARTNERS -LP is currently lower than what is desirable, coming in at 25.30%. Regardless of FGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.66% trails the industry average.
- 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 Gas Utilities industry. The net income has significantly decreased by 47.8% when compared to the same quarter one year ago, falling from $35.81 million to $18.69 million.
- The debt-to-equity ratio is very high at 39.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FGP has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Ferrellgas Partners Ratings Report.
- Our dividend calendar.