NEW YORK (TheStreet) -- Shares of VimpelCom (VIP - Get Report) are down -4.10% to $8.18 as the mobile phone operator faces the threat of increased economic sanctions against Russia following the crash of a Malaysia airliner last week that has been linked by the U.S. to rebels in Ukraine that are supported by Russia.
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TheStreet Ratings team rates VIMPELCOM LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIMPELCOM LTD (VIP) a SELL. This is driven by multiple weaknesses, 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 deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 significantly decreased by 90.4% when compared to the same quarter one year ago, falling from $408.00 million to $39.00 million.
- The debt-to-equity ratio is very high at 3.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, VIP has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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 Wireless Telecommunication Services industry and the overall market, VIMPELCOM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $1,168.00 million or 8.32% 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.
- The share price of VIMPELCOM LTD has not done very well: it is down 16.43% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: VIP Ratings Report