NEW YORK (TheStreet) -- Orbitz Worldwide (OWW) stock coverage was initiated by Guggenheim with a "neutral" rating. In Tuesday's morning trading session, shares of Orbitz Worldwide are down 0.22% to $11.56.
Earlier this month, the company reported a first quarter loss of $20.9 million, missing analysts' expectations.
The company reported a loss of 14 cent per share on revenue of $220 million. In the same quarter last year, the company reported a loss of 5 cents per share on revenue of $210 million.
It was expected to post a profit of 3 cents per share, according to analysts polled by Thomson Reuters.
While revenue increased from a year ago, it was due to a rise in customer service costs and fraudulent transactions, Reuters reported. The fraudulent transactions did not come from a data breach, but from the illegal use of credit card information obtained elsewhere, according to Orbitz Worldwide.
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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OWW's revenue growth trails the industry average of 19.1%. Since the same quarter one year prior, revenues slightly increased by 4.7%. 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.
- Net operating cash flow has slightly increased to $165.19 million or 5.57% when compared to the same quarter last year. Despite an increase in cash flow, ORBITZ WORLDWIDE INC's cash flow growth rate is still lower than the industry average growth rate of 40.84%.
- The gross profit margin for ORBITZ WORLDWIDE INC is rather high; currently it is at 67.08%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OWW's net profit margin of -9.50% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 7.52 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OWW has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market on the basis of return on equity, ORBITZ WORLDWIDE INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: OWW Ratings Report