NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.0%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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.
- Although USM's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for US CELLULAR CORP is rather high; currently it is at 57.40%. Regardless of USM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, USM's net profit margin of 0.30% is significantly lower than the same period one year prior.
- Net operating cash flow has decreased to $221.48 million or 23.70% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The share price of US CELLULAR CORP has not done very well: it is down 19.20% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
United States Cellular Corporation operates as a wireless telecommunications service provider in the United States. The company offers wireless voice and data services to retail consumer and business customers. The company has a P/E ratio of 20, below the average telecommunications industry P/E ratio of 22.2 and above the S&P 500 P/E ratio of 17.7. United States Cellular has a market cap of $2.38 billion and is part of the
industry. Shares are down 7.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff