Updated (4:20 p.m.): Updated with one-year low price and Friday market close information.
NEW YORK (TheStreet) -- NII Holdings (NIHD) - Get Report plunged to a one-year low of 83 cents on Friday as two separate law firms began investigations into the mobile communications services provider for potential fraud.
Frank & Bianco LLP announced Thursday it had begun an investigation for the period of Feb. 25, 2010 to Feb. 27, 2014 for alleged violations of the Securities Act of 1933 and Securities Exchange Act of 1934 that "occurred when the company and certain of its officers and/or directors issued materially false and misleading statements or omitted to state material information" during the aforementioned period, according to a press release.
Levi & Korinsky LLP said Friday it had begun an investigation for the same period. The class action lawsuit alleges the company "made materially false and misleading statements and/or concealed material information relating to the company's business, financial state, and future prospects," according to a press release. The complaint specifically alleges that NII and NII Capital hid the company's failing efforts to modernize its telecommunications network and expand its subscriber base and also failed to provide relevant information in offering documents it filed with the Securities and Exchange Commission tied to the issuance of NII Capital Notes in March and Dec. 2011.
The stock fell 16.61% to 89 cents, down 18 cents from its previous close of $1.07, at the close of the trading day on Friday. It had a volume of 13,422,884, more than its average of 8,420,780. The stock hit a high of $1.06 for the day and holds a one-year high of $9.82.
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TheStreet Ratings team rates NII HOLDINGS INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate NII HOLDINGS INC (NIHD) a SELL. This is driven by a number of negative factors, 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. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NII HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, NII HOLDINGS INC swung to a loss, reporting -$4.15 versus $1.31 in the prior year. For the next year, the market is expecting a contraction of 48.4% in earnings (-$6.16 versus -$4.15).
- 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 263.9% when compared to the same quarter one year ago, falling from -$82.42 million to -$299.94 million.
- 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 Wireless Telecommunication Services industry and the overall market, NII HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$62.41 million or 156.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 76.26%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 372.22% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: NIHD Ratings Report
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.