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NEW YORK (TheStreet) -- ModusLink Global Solutions (MLNK)  is dropping after announcing an offering of convertible senior notes to institutional buyers.

By midafternoon Thursday, shares had taken off 14.1% to $4.20. Trading volume of 2.1 million was more than 13 times its three-month daily average.

The company, which provides supply chain management services, said it would offer $90 million worth of its convertible senior notes due 2019. The notes offer 5.25% interest and are due to mature on March 1, 2019.

ModusLink also offered the initial purchaser a 30-day option to purchase an additional $10 million worth of notes.

The offering is scheduled to close on March 18, pursuant to customary closing conditions.

The Waltham, Mass.-based business said it intends to use capital raised for general corporate purposes. The company said these purposes could include potential acquisitions, though noted no material acquisitions are probable at this time.

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TheStreet Ratings team rates MODUSLINK GLOBAL SOLUTIONS as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate MODUSLINK GLOBAL SOLUTIONS (MLNK) 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 solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 106.89% and other important driving factors, this stock has surged by 78.04% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 108.5% when compared to the same quarter one year prior, rising from -$12.55 million to $1.06 million.
  • Despite the weak revenue results, MLNK has outperformed against the industry average of 20.8%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. The declining revenue has not hurt the company's bottom line, with increasing 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 IT Services industry and the overall market, MODUSLINK GLOBAL SOLUTIONS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MODUSLINK GLOBAL SOLUTIONS is currently extremely low, coming in at 13.23%. Regardless of MLNK's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MLNK's net profit margin of 0.54% is significantly lower than the industry average.

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.