NEW YORK (TheStreet) -- Orbitz Worldwide (OWW) stock is increasing by 0.67% to $12 in after-hours trading on Wednesday, after U.S. regulators granted Expedia(EXPE) - Get Report clearance to acquire the company in a $1.6 billion deal.
Expedia stock is up 0.94% to $125.85 in after-hours trading.
The Justice Department's Antitrust Division found that the acquisition will not reduce competition in the online travel booking market and will not affect U.S. consumers, assistant attorney general Bill Baer said in a statement.
Orbitz agreed to be acquired by Expedia in February for $12 per share in cash and Orbitz shareholders approved the deal in May.
The transaction will lead to only two large online travel agencies in the U.S., the other being Priceline Group (PCLN) , but Baer pointed out that other players have entered the market in the past 18 months, including Trip Advisor's (TRIP) - Get Report Instant Booking and Google's (GOOGL) - Get Report Hotel and Flight Finder.
Separately, 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 solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, OWW's share price has jumped by 34.69%, exceeding the performance of the broader market during that same time frame. 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 gross profit margin for ORBITZ WORLDWIDE INC is currently very high, coming in at 73.33%. 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 -1.77% trails the industry average.
- The revenue fell significantly faster than the industry average of 34.0%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 Internet & Catalog Retail industry. The net income has significantly decreased by 161.8% when compared to the same quarter one year ago, falling from $6.88 million to -$4.25 million.
- Net operating cash flow has significantly decreased to $9.51 million or 80.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: OWW