3 Sell-Rated Dividend Stocks: NAUH, KRO, MEMP

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."

National American University Holdings

Dividend Yield: 9.00%

National American University Holdings (NASDAQ: NAUH) shares currently have a dividend yield of 9.00%.

National American University Holdings, Inc. owns and operates National American University (NAU) that provides postsecondary education services primarily for working adults and other non-traditional students in the United States. The company operates through two segments, NAU and Other.

The average volume for National American University Holdings has been 2,800 shares per day over the past 30 days. National American University Holdings has a market cap of $48.3 million and is part of the diversified services industry. Shares are down 3.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates National American University Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 Diversified Consumer Services industry. The net income has significantly decreased by 229.2% when compared to the same quarter one year ago, falling from $1.46 million to -$1.89 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 Diversified Consumer Services industry and the overall market, NATIONAL AMERN UNIV HLDG INC's return on equity significantly trails that of both the industry average and 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 34.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 233.33% 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.
  • NATIONAL AMERN UNIV HLDG 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. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NATIONAL AMERN UNIV HLDG INC increased its bottom line by earning $0.27 versus $0.13 in the prior year.
  • NAUH, with its decline in revenue, underperformed when compared the industry average of 7.2%. Since the same quarter one year prior, revenues fell by 22.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Kronos Worldwide

Dividend Yield: 10.50%

Kronos Worldwide (NYSE: KRO) shares currently have a dividend yield of 10.50%.

Kronos Worldwide, Inc. produces and markets titanium dioxide pigments (TiO2) worldwide.

The average volume for Kronos Worldwide has been 365,000 shares per day over the past 30 days. Kronos Worldwide has a market cap of $661.7 million and is part of the chemicals industry. Shares are up 0.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Kronos Worldwide as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 Chemicals industry. The net income has significantly decreased by 120.7% when compared to the same quarter one year ago, falling from $18.40 million to -$3.80 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 Chemicals industry and the overall market, KRONOS WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KRONOS WORLDWIDE INC is rather low; currently it is at 15.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.19% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$15.30 million or 53.00% 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 41.74%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 118.75% 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.

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Memorial Production Partners

Dividend Yield: 8.00%

Memorial Production Partners (NASDAQ: MEMP) shares currently have a dividend yield of 8.00%.

Memorial Production Partners LP, through its subsidiary, Memorial Production Operating LLC, engages in the acquisition, development, exploitation, and production of oil and natural gas properties.

The average volume for Memorial Production Partners has been 554,500 shares per day over the past 30 days. Memorial Production Partners has a market cap of $124.3 million and is part of the energy industry. Shares are down 42.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Memorial Production Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 3.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MEMORIAL PRODUCTION PRTRS LP is currently extremely low, coming in at 5.93%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MEMP's net profit margin of -62.59% significantly underperformed when compared to the industry average.
  • MEMP'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 86.84%, 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.
  • MEMP, with its decline in revenue, underperformed when compared the industry average of 24.1%. Since the same quarter one year prior, revenues fell by 34.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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