Rating Change #1
USA Mobility Inc
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- USMO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, USMO has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for USA MOBILITY INC is rather high; currently it is at 65.80%. Regardless of USMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, USMO's net profit margin of 14.60% compares favorably to the industry average.
- USA MOBILITY INC's earnings per share declined by 21.7% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, USA MOBILITY INC increased its bottom line by earning $3.94 versus $3.48 in the prior year.
- USMO, with its decline in revenue, underperformed when compared the industry average of 0.3%. Since the same quarter one year prior, revenues fell by 12.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
USA Mobility, Inc. provides wireless messaging, mobile voice, and data and unified communications solutions to the healthcare, government, and enterprise sectors in the United States. The company provides one-way and two-way messaging services. The company has a P/E ratio of 5.9, below the S&P 500 P/E ratio of 17.7. USA Mobility has a market cap of $253.6 million and is part of the technology sector and telecommunications industry. Shares are down 1% year to date as of the close of trading on Wednesday.
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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.