NEW YORK ( TheStreet) -- Orbitz Worldwide (NYSE: OWW) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has not been very careful in the management of its balance sheet. Highlights from the ratings report include:
- Powered by its strong earnings growth of 45.45% and other important driving factors, this stock has surged by 34.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- ORBITZ WORLDWIDE INC has improved earnings per share by 45.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ORBITZ WORLDWIDE INC continued to lose money by earning -$0.36 versus -$0.57 in the prior year. This year, the market expects an improvement in earnings ($0.27 versus -$0.36).
- The gross profit margin for ORBITZ WORLDWIDE INC is currently very high, coming in at 81.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.40% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, ORBITZ WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 2.91 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
-- Written by a member of TheStreet RatingsStaff