Rating Change #7
Mobile Telesystems OJSC (MBT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and generally higher debt management risk.
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Highlights from the ratings report include:
- Net operating cash flow has increased to $997.61 million or 31.05% when compared to the same quarter last year. In addition, MOBILE TELESYSTEMS OJSC has also vastly surpassed the industry average cash flow growth rate of -33.35%.
- MOBILE TELESYSTEMS OJSC has exprienced 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 reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOBILE TELESYSTEMS OJSC increased its bottom line by earning $1.46 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.46).
- MBT, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 3.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, MBT has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 285.8% when compared to the same quarter one year ago, falling from $367.01 million to -$681.76 million.