NEW YORK (TheStreet) -- Shares of Central European Media (CETV - Get Report) exploded 57.56% to $4.27 on Friday after the company announced its main shareholder, Time Warner Cable (TWC), would secure its financing requirements.
"We are seeking to raise up to approximately US$ 545.0 million in new indebtedness through these transactions to enable us to refinance the 2016 Fixed Rate Notes and for general corporate purposes," the company said in a regulatory filing. "These transactions, if closed, will significantly reduce the amount of cash interest to be paid in the coming years by replacing cash pay indebtedness with non-cash pay indebtedness and will provide sufficient liquidity to fund our operations and relieve pressure on our working capital position."
The transactions include issuing rights for debt notes and warrants for new shares.
For the fourth quarter, Central European Media reported a loss of 72 cents a share on revenue of $237.9 million, down year over year from $253.34 million. Analysts polled by Thomson Reuters expected revenue of $206.5 million. Quarterly operating income before depreciation and amortization (OIBDA) loss totaled $400,000, which was far better than analysts' expectations of a $9.9 million loss.
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TheStreet Ratings team rates CENTRAL EUROPEAN MEDIA as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about its recommendation:
"We rate CENTRAL EUROPEAN MEDIA (CETV) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Media industry and the overall market, CENTRAL EUROPEAN MEDIA's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CENTRAL EUROPEAN MEDIA is currently extremely low, coming in at 8.08%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -16.99% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$17.24 million or 97.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- CETV's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 51.35%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- CENTRAL EUROPEAN MEDIA reported significant earnings per share improvement 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 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CENTRAL EUROPEAN MEDIA reported poor results of -$6.10 versus -$2.70 in the prior year.
- You can view the full analysis from the report here: CETV Ratings Report