Rating Change #1
Mobile Telesystems OJSC
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- MOBILE TELESYSTEMS OJSC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($1.74 versus $1.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 74.1% when compared to the same quarter one year prior, rising from $361.84 million to $630.01 million.
- The gross profit margin for MOBILE TELESYSTEMS OJSC is rather high; currently it is at 69.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.10% is above that of the industry average.
- MBT, with its decline in revenue, slightly underperformed the industry average of 4.7%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
Mobile TeleSystems OJSC, together with its subsidiaries, provides telecommunications services primarily in the Russian Federation, Ukraine, Uzbekistan, Armenia, and Belarus. The company has a P/E ratio of 12, below the S&P 500 P/E ratio of 17.7. Mobile Telesystems OJSC has a market cap of $17.42 billion and is part of the technology sector and telecommunications industry. Shares are up 19.3% year to date as of the close of trading on Tuesday.
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-- Reported by Kevin Baker in Palm Beach Gardens, Fla.
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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.