NEW YORK (TheStreet) -- Shares of Orbitz Worldwide Inc. (OWW - Get Report) are up 6.94% to $7.40 in pre-market trade after the online travel company announced the pricing of a previously announced underwritten public offering of 7.5 million shares of its common stock held by an affiliate of Travelport Limited, at a price to the public of $6.60 per share.
The underwriters have a 30-day option to purchase up to an additional 1.125 million shares from the selling stockholder. Orbitz Worldwide will not receive any proceeds from the offering. The offering is scheduled to close on May 29, 2014..
Credit Suisse Securities (USA) (CS - Get Report) and Morgan Stanley & Co. (MS - Get Report) are serving as lead joint book-running managers. Deutsche Bank Securities (DB - Get Report) and UBS Securities (UBS) are acting as joint book-running managers of the offering. Cowen and Company (COWN - Get Report) is serving as co-manager of the offering.
TheStreet Ratings team rates ORBITZ WORLDWIDE INC as a Hold with a ratings score of C-. TheStreet Ratings 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 revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow."
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 4.5%. Since the same quarter one year prior, revenues slightly increased by 3.6%. 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 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 79.67%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.82% 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 Internet & Catalog Retail industry. The net income has significantly decreased by 104.1% when compared to the same quarter one year ago, falling from $146.20 million to -$5.93 million.
- The debt-to-equity ratio is very high at 13.63 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OWW has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: OWW Ratings Report