NEW YORK (TheStreet) -- NII Holding (NIHD) shares dropped down -75.6% after the company announced that it will likely be filing for bankruptcy because it cannot fulfill its financial obligations.
“Despite the actions we’ve taken to improve our operational performance, we have fallen short in our efforts, leaving the company with a liquidity position that is not sufficient to support the business,” said NII CEO Steve Shindler.
The telecom company's South American and Mexican operations have been hurt by superior rivals America Movil (AMX - Get Report) and Telefonica SA (TEF - Get Report).
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TheStreet Ratings team downgraded the company's stock to SELL last Saturday when the stock price was $6.66.
TheStreet Ratings team rates NII HOLDINGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NII HOLDINGS INC (NIHD) a SELL. This is driven by several 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, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 81.2% when compared to the same quarter one year ago, falling from -$207.50 million to -$376.08 million.
- The gross profit margin for NII HOLDINGS INC is currently lower than what is desirable, coming in at 33.93%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -40.04% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$485.56 million or 240.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 90.51%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 102.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- NII HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NII HOLDINGS INC reported poor results of -$9.34 versus -$3.47 in the prior year. This year, the market expects an improvement in earnings (-$8.76 versus -$9.34).
- You can view the full analysis from the report here: NIHD Ratings Report