Paramount Communications Downgraded to 'Hold' by MarketsMOJO on Recent Financial Results

Paramount Communications, a smallcap company in the cable industry, has recently been downgraded to a 'Hold' by MarketsMOJO on November 18, 2024. This decision was based on the company's recent financial results and other key factors.
In the September 2024 quarter, Paramount Communications reported a growth in operating profit of 44.66%, which was deemed as very positive. This marks the 13th consecutive quarter of positive results for the company. Additionally, the company's PAT (HY) has grown at a rate of 34.13% and its ROCE (HY) is at a high of 15.56%. The company also has a high debtors turnover ratio of 5.69 times.

Despite these positive indicators, the stock has been downgraded to a 'Hold' due to several reasons. Firstly, the company has a high debt to EBITDA ratio of 4.62 times, indicating a low ability to service debt. This is further supported by the company's low Return on Capital Employed (avg) of 7.79%. This signifies low profitability per unit of total capital.

In terms of long-term growth, Paramount Communications has underperformed with net sales growing at an annual rate of 14.23% and operating profit at 19.67% over the last 5 years. The stock is also currently in a mildly bearish range, with technical factors such as MACD and Bollinger Band also showing a bearish trend.

Furthermore, institutional investors have decreased their stake in the company by -4.9% over the previous quarter, indicating a lack of confidence in the company's future prospects. In the last 1 year, the stock has also underperformed the market with a return of only 6.18%, compared to the market's return of 26.29%.

In conclusion, while Paramount Communications has shown positive results in the recent quarter, there are several factors that have led to its downgrade to a 'Hold'. Investors are advised to carefully consider these factors before making any investment decisions.