NEW YORK (TheStreet) -- Coastal Contacts (COA) soared to an all-time high of $11.34 on Thursday after the online retailer of contact lenses and eyeglasses announced that Essilor International would acquire it for approximately CAD$430 million.
Essilor, a Paris-based company that produces ophthalmic lenses and other ophthalmic optical equipment, will buy all issued and outstanding common shares of Coastal Contacts for CAD$12.45 a share.
The stock had already amassed a volume of more than 1.5 million by 12:40 p.m., more than 35 times its average of 41,864. It hit a low of $11.19 for the day and holds a one-year low of $4.43.
TheStreet Ratings team rates COASTAL CONTACTS INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COASTAL CONTACTS INC (COA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, COA's share price has jumped by 55.44%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- COA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that COA's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, COASTAL CONTACTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$4.85 million or 180.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: COA Ratings Report