Leucadia National Corporation Stock Upgraded (NYSE:LUK)
By The Street Wire---May 8, 2012
LUK has been upgraded by The Street Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- LUK's very impressive revenue growth greatly exceeded the industry average of 5.1%. Since the same quarter one year prior, revenues leaped by 1103.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 4571.9% when compared to the same quarter one year prior, rising from $10.51 million to $490.88 million.
- LUK's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
- LEUCADIA NATIONAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, LEUCADIA NATIONAL CORP reported lower earnings of $0.06 versus $7.62 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.06).
- The gross profit margin for LEUCADIA NATIONAL CORP is rather low; currently it is at 20.70%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 20.30% is above that of the industry average.
Leucadia National Corporation engages in beef processing, manufacturing, land based contract oil and gas drilling, gaming entertainment, real estate activities, medical product development, and winery operations in the United States and internationally. The company has a P/E ratio of 355.9, above the average conglomerates industry P/E ratio of 249.1 and above the S&P 500 P/E ratio of 17.7. Leucadia has a market cap of $6.09 billion and is part of the conglomerates sector and conglomerates industry. Shares are up 8.2% year to date as of the close of trading on Monday.
Disclosure: I am long LUK.
Additional disclosure: This is a reprint from TheStreet.com