This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Will This Downgrade Hurt Orbitz Worldwide (OWW) Today?

Stocks in this article: OWW

NEW YORK (TheStreet) -- Orbitz Worldwide (OWW) has been downgraded to "sell" from "neutral" with an $8 price target, Goldman Sachs said Wednesday.

The firm said the revision was a valuation call due to slowing growth.

"We believe OWW could underperform as it faces tough comps from lapping the start of its American Express white-label relationship, air volume slows as the result of the end of its 5-year exclusive relationship with Kayak and what we see as better air execution at EXPE and PCLN, and early traction in its Orbitz Rewards program (leading to higher contra-revenue) puts pressure on revenue growth," analysts wrote in a note to clients.

By market open, shares had cratered 9.3% to $8.12.

Must read: Warren Buffett's 10 Favorite Stocks

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

------------------------

Separately, TheStreet Ratings team rates ORBITZ WORLDWIDE INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate ORBITZ WORLDWIDE INC (OWW) 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 notable return on equity, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Internet & Catalog Retail industry and the overall market, ORBITZ WORLDWIDE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ORBITZ WORLDWIDE INC is currently very high, coming in at 82.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 2.70% is above that of the industry average.
  • ORBITZ WORLDWIDE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ORBITZ WORLDWIDE INC turned its bottom line around by earning $1.50 versus -$2.84 in the prior year. For the next year, the market is expecting a contraction of 76.7% in earnings ($0.35 versus $1.50).
  • The debt-to-equity ratio is very high at 10.62 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to -$24.88 million or 2654.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs