NEW YORK (TheStreet) -- Neustar (NSR) stock is sliding Monday after an email from the North American Numbering Council (NANC) to the FCC suggested an Ericsson (ERIC) - Get Report unit was close to winning a phone number management contract currently held by Neustar. Neustar's current contract expires June 30, 2015. The company is currently competing for the next five-year contract.
"This most recent development is troubling given that the selection of the country's next LNPA is an important FCC responsibility in the communications field. The process has also been marred by apparent leaks of confidential information, as well as substantive and other procedural problems... The NANC recommendation is by no means the end of the process," the company wrote in a statement.
By early afternoon, shares had dropped 7.8% to $24.59. Trading volume of 3.7 million shares was more than double its three-month daily average.
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TheStreet Ratings team rates NEUSTAR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NEUSTAR INC (NSR) 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, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Even though the current debt-to-equity ratio is 1.35, it is still below the industry average, suggesting that this level of debt is acceptable within the IT Services industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.60 is very high and demonstrates very strong liquidity.
- NSR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 44.17%, which is also worse than the performance of the S&P 500 Index. 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.
- The change in net income from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income has decreased by 6.2% when compared to the same quarter one year ago, dropping from $33.76 million to $31.68 million.
- You can view the full analysis from the report here: NSR Ratings Report