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Why World Wrestling Entertainment (WWE) Hit an All-Time High Today

Stocks in this article: WWE

NEW YORK (TheStreet) -- World Wrestling Entertainment  (WWE) spiked to an all-time high of $31.91 on Thursday amid rumors that AMC Networks  (AMCX) is interested in purchasing the company.

The company recently released the WWE Network, an all-hours streaming network with live and on-demand content and all of the company's annual pay-per-views for $9.99 a month. But WWE is also in the process of searching for a new cable television partner for its weekly television shows Monday Night Raw and Friday Night Smackdown, neither of which air live on the WWE Network at this time.

WWE's exclusive negotiating window with NBCUniversal, which currently carries the shows, expired in February, according to Variety. The two sides could not come to a deal for the rights to WWE's television programming, so WWE is now negotiating with other companies, though NBCUniversal can still make a deal with the company.

The spike from the rumors sharply declined almost immediately, and the stock closed at $29.76, a mere 0.3% or 9 cents greater than its previous close of $29.67. The stock had a volume of 2,313,427, more than double its average of 994,922.

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TheStreet Ratings team rates WORLD WRESTLING ENTMT INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WORLD WRESTLING ENTMT INC (WWE) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

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 4.2%. Since the same quarter one year prior, revenues slightly increased by 2.9%. 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.
  • WWE's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WWE has a quick ratio of 2.05, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its closing price of one year ago, WWE's share price has jumped by 239.40%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The gross profit margin for WORLD WRESTLING ENTMT INC is currently lower than what is desirable, coming in at 26.52%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -6.67% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $11.65 million or 47.24% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: WWE Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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