NEW YORK (TheStreet) -- Towerstream (TWER)  stock is gaining Thursday after announcing it had teamed with Alcatel-Lucent to deploy small cell wireless infrastructure. The agreement will see Alcatel-Lucent leveraging Towerstream's fixed wireless and small cell assets, giving access to locations and services to meet customers' needs. 

"Alcatel-Lucent's expertise and relationship with carriers puts our real estate assets on a quick path to small cell deployments," said Towerstream CEO Jeff Thompson in a statement. "The combination of their market experience and customer base coupled with our 5000 plus locations, immediately available on-site high capacity backhaul, and pre-built infrastructure allows us the opportunity to instantly meet the needs of carriers whether it be an all encompassing build-out or a la carte solutions."

By midday, shares had spiked 11.3% to $1.97.

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TheStreet Ratings team rates TOWERSTREAM CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate TOWERSTREAM CORP (TWER) a SELL. This is driven by several 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 Diversified Telecommunication Services industry. The net income has decreased by 15.7% when compared to the same quarter one year ago, dropping from -$5.63 million to -$6.51 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 Diversified Telecommunication Services industry and the overall market, TOWERSTREAM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TOWERSTREAM CORP is rather low; currently it is at 16.13%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -77.68% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$5.09 million or 15.08% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TOWERSTREAM CORP has marginally lower results.
  • Looking at the price performance of TWER's shares over the past 12 months, there is not much good news to report: the stock is down 31.28%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.

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