NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally poor debt management and weak operating cash flow.
Highlights from the ratings report include:
- MBT's revenue growth trails the industry average of 41.1%. Since the same quarter one year prior, revenues rose by 12.2%. 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.
- MOBILE TELESYSTEMS OJSC's earnings per share declined by 15.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOBILE TELESYSTEMS OJSC increased its bottom line by earning $1.44 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.44).
- The gross profit margin for MOBILE TELESYSTEMS OJSC is rather high; currently it is at 69.90%. Regardless of MBT'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 11.00% trails the industry average.
- Looking at the price performance of MBT's shares over the past 12 months, there is not much good news to report: the stock is down 25.80%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, MBT is still more expensive than most of the other companies in its industry.
- Net operating cash flow has declined marginally to $908.04 million or 5.91% 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.
Mobile TeleSystems OJSC, together with its subsidiaries, provides telecommunications services primarily in the Russian Federation, Ukraine, Uzbekistan, Turkmenistan, Armenia, and Belarus. The company has a P/E ratio of 15.9, above the average telecommunications industry P/E ratio of 11.5 and below the S&P 500 P/E ratio of 17.7. Mobile TeleSystems has a market cap of $15.3 billion and is part of the
industry. Shares are down 23.8% year to date as of the close of trading on Friday.
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