Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Orbitz Worldwide (NYSE: OWW) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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- 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 & Catalog Retail industry. The net income has significantly decreased by 576.5% when compared to the same quarter one year ago, falling from -$46.51 million to -$314.63 million.
- Net operating cash flow has significantly decreased to $0.97 million or 75.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- In its most recent trading session, OWW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- ORBITZ WORLDWIDE INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ORBITZ WORLDWIDE INC reported poor results of -$2.84 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$2.84).
- The gross profit margin for ORBITZ WORLDWIDE INC is currently very high, coming in at 79.90%. Regardless of OWW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OWW's net profit margin of -165.82% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff