NEW YORK (TheStreet) -- Shares of Orbitz Worldwide Inc. (OWW) are down -0.50% to $8 in pre-market trade after American Airlines (AAL - Get Report) said it withdrew its flights from their consumer websites, echoing a similar dispute between the airline and the online travel agency about three years ago, the Wall Street Journal reports.
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 compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OWW's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 9.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 80.80%. Regardless of OWW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.77% trails the industry average.
- This stock's share value has moved by only 9.97% over the past year. 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.
- The debt-to-equity ratio is very high at 13.21 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 0.53, 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