Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- 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 Communications Equipment industry. The net income has significantly decreased by 660.7% when compared to the same quarter one year ago, falling from $62.11 million to -$348.27 million.
- The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ALU maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Communications Equipment industry and the overall market, ALCATEL-LUCENT's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to -$510.93 million or 60.02% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- This stock's share value has moved by only 64.27% over the past year. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
Alcatel-Lucent, S.A. provides networking and communications technology, products, and services to service providers, enterprises, and governments worldwide. The company has a P/E ratio of 3.3, above the average telecommunications industry P/E ratio of 2.1 and below the S&P 500 P/E ratio of 17.7. Alcatel-Lucent has a market cap of $2.68 billion and is part of the
industry. Shares are down 21.2% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff