NEW YORK (TheStreet) -- Shares of Rentrak Corp. (RENT) closed higher by 24.51% to $50.07 on heavy trading volume on Wednesday afternoon, after it was announced that comScore (SCOR) - Get Report will acquire the company for $771 million in stock.
Rentrak is a provider of worldwide consumer viewership information to the entertainment and marketing industries.
The boards of both companies have approved the deal, and when completed comScore shareholders are expected to own approximately 66.5% and Rentrak shareholders are expected to own approximately 33.5% of the combined company.
"By combining comScore and Rentrak's products, talent and significant information assets, the new company will provide even more robust measurement solutions to the media and advertising industries, following the consumer whenever and wherever content is consumed," comScore said in a statement.
The deal is expected to close early next year.
Separately, TheStreet Ratings team rates RENTRAK CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate RENTRAK CORP (RENT) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 23.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RENT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.20, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for RENTRAK CORP is rather high; currently it is at 68.67%. Regardless of RENT'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 5.69% trails the industry average.
- RENT has underperformed the S&P 500 Index, declining 20.69% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has significantly decreased to -$3.05 million or 402.80% 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: RENT