NEW YORK (TheStreet) -- Shares of Russian Internet company Yandex N.V. (YNDX) - Get Report fell 4.59% to $16.23 in late afternoon trading Monday after Moody's followed suit with S&P in downgrading the nation's debt rating to junk.
Last month, Moody's brought Russia's debt rating down to the verge of junk status at Baa3, but the firm went a step further late Friday with a downgrade to Ba1 with a negative outlook. Moody's said Russia is "expected to experience a deep recession in 2015 and a continued contraction in 2016."
S&P downgraded Russia to a junk rating on January 26, while Fitch brought Russia down to the verge of junk status on January 9.
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The U.S. and U.K. also brought up the possibility of further sanctions on Russia with regard to the Ukraine situation over the weekend. A cease-fire was supposed to go into effect in Ukraine last week.
Secretary of State John Kerry met with his British counterpart, foreign secretary Philip Hammond, to discuss the potential imposition of further sanctions on Russia after what Kerry called "brazen" violations of the cease-fire agreement, according to the New York Times.
"We know to a certainty what Russia has been providing to the separatists," Kerry said at the beginning of a meeting Hammond. "We're not going to sit there and be part of this kind of extraordinarily craven behavior at the expense of the sovereignty and integrity of a nation."
Separately, TheStreet Ratings team rates YANDEX N.V. as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate YANDEX N.V. (YNDX) 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 reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, 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 gross profit margin for YANDEX N.V. is currently very high, coming in at 73.51%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.35% significantly outperformed against the industry average.
- Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.60 is very high and demonstrates very strong liquidity.
- 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 Internet Software & Services industry. The net income has significantly decreased by 43.1% when compared to the same quarter one year ago, falling from $156.61 million to $89.10 million.
- Net operating cash flow has declined marginally to $103.44 million or 1.95% 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.
- You can view the full analysis from the report here: YNDX Ratings Report