NEW YORK (TheStreet) -- Gogo (GOGO) - Get Gogo Inc. Report was gaining 6.6% to $17.90 Thursday following reports that Verizon (VZ) - Get Verizon Communications Inc. Report might be interested in the company.
Verizon "might be studying a potential joint venture, acquisition or partnership," according to a report from Runway Girl Network. Such a move would compete against AT&T (T) - Get AT&T Inc. Report which announced early plans to offer in-flight Wi-Fi services in April.
Verizon previously offer seat-back phones on U.S. flights until Gogo bought an exclusive license to the 3MHz spectrum for its in-flight Wi-Fi services.
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TheStreet Ratings team rates GOGO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOGO INC (GOGO) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.00 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, GOGO has managed to keep a strong quick ratio of 2.05, which demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, GOGO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 49.57% is the gross profit margin for GOGO INC which we consider to be strong. Regardless of GOGO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GOGO's net profit margin of -18.75% significantly underperformed when compared to the industry average.
- GOGO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOGO INC reported poor results of -$1.32 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings (-$0.92 versus -$1.32).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 66.7% when compared to the same quarter one year prior, rising from -$55.99 million to -$18.66 million.
- You can view the full analysis from the report here: GOGO Ratings Report
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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.