Russian soldiers recently took control of several locations in the Crimea region of Ukraine. The U.S. condemned the move, warning of consequences. As a Russian telecom, Mobile Telesystems was hurt by the potential consequences of the invasion.
VimpelCom (VIP), another Russian telecom, was also hurt by the invasion. Shares of the company were falling 6.8% to $9.47.
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TheStreet Ratings team rates MOBILE TELESYSTEMS OJSC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOBILE TELESYSTEMS OJSC (MBT) 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 revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, MOBILE TELESYSTEMS OJSC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for MOBILE TELESYSTEMS OJSC is currently very high, coming in at 71.77%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MBT's net profit margin of 17.62% significantly trails the industry average.
- 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 Wireless Telecommunication Services industry. The net income has decreased by 7.6% when compared to the same quarter one year ago, dropping from $630.01 million to $582.32 million.
- Currently the debt-to-equity ratio of 1.73 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, MBT maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: MBT Ratings Report