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."Outerwall Dividend Yield: 5.20% Outerwall (NASDAQ: OUTR) shares currently have a dividend yield of 5.20%. Outerwall Inc., through its subsidiaries, provides automated retail solutions primarily in the United States, Canada, Puerto Rico, Ireland, and the United Kingdom. The company has a P/E ratio of 16.43. The average volume for Outerwall has been 428,200 shares per day over the past 30 days. Outerwall has a market cap of $794.6 million and is part of the specialty retail industry. Shares are up 27% 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 Outerwall as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 8.0% when compared to the same quarter one year prior, going from $35.60 million to $38.45 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. Compared to other companies in the Specialty Retail industry and the overall market, OUTERWALL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- OUTERWALL INC's earnings per share improvement from the most recent quarter was slightly positive. 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, OUTERWALL INC reported lower earnings of $2.69 versus $6.04 in the prior year. This year, the market expects an improvement in earnings ($6.24 versus $2.69).
- The gross profit margin for OUTERWALL INC is currently lower than what is desirable, coming in at 29.85%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.17% trails that of the industry average.
- Net operating cash flow has decreased to $67.21 million or 36.64% 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 Outerwall Ratings Report.
- OUT's revenue growth trails the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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.
- Net operating cash flow has significantly increased by 482.75% to $33.80 million when compared to the same quarter last year. In addition, OUTFRONT MEDIA INC has also vastly surpassed the industry average cash flow growth rate of 11.78%.
- 40.27% is the gross profit margin for OUTFRONT MEDIA INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.66% is in-line with 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 309.1% when compared to the same quarter one year ago, falling from $1.10 million to -$2.30 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 Real Estate Investment Trusts (REITs) industry and the overall market, OUTFRONT MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Outfront Media Ratings Report.
- OAK's very impressive revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues leaped by 347.1%. 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.
- Net operating cash flow has significantly increased by 82.67% to -$328.82 million when compared to the same quarter last year. In addition, OAKTREE CAPITAL GROUP LLC has also vastly surpassed the industry average cash flow growth rate of -146.35%.
- 36.03% is the gross profit margin for OAKTREE CAPITAL GROUP LLC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.88% trails the industry average.
- The share price of OAKTREE CAPITAL GROUP LLC has not done very well: it is down 17.24% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Oaktree Capital Group Ratings Report.
- Our dividend calendar.