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ORBCOMM Inc. Stock Downgraded (ORBC)

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.

NEW YORK ( TheStreet) -- ORBCOMM (Nasdaq: ORBC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • ORBC's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ORBC's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.35, which clearly demonstrates the ability to cover short-term cash needs.
  • 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 54.0% when compared to the same quarter one year ago, falling from $2.41 million to $1.11 million.
  • Net operating cash flow has significantly decreased to -$0.35 million or 120.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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ORBCOMM Inc., a wireless data communications company, operates commercial wireless messaging system optimized for narrowband data communications primarily in the United States and Japan. The company has a P/E ratio of 24.9, above the S&P 500 P/E ratio of 17.7. ORBCOMM has a market cap of $174.8 million and is part of the technology sector and telecommunications industry. Shares are down 4.8% year to date as of the close of trading on Tuesday.

You can view the full ORBCOMM Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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