Shares of the French telecom rose 2.8% to $4.44 on Monday. Alcatel Lucent shed 4.4% in the past month. The telecom gained 156% over the past year, however, with a 52-week high of $4.61 on Jan. 8. More than 11.5 million shares of the company were traded Monday, compared to the average daily trading volume of about 16.2 million.
On Jan. 9, Duetsche Bank downgraded Alcatel Lucent to "hold" from "buy," with a price target of $3.30.
ALU data by YCharts
TheStreet Ratings team rates ALCATEL-LUCENT as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about its recommendation:
"We rate ALCATEL-LUCENT (ALU) a SELL. This is driven by a few notable 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 generally high debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 3.98 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ALU maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.
- 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 Communications Equipment industry and the overall market, ALCATEL-LUCENT's return on equity significantly trails that of both the industry average and the S&P 500.
- ALCATEL-LUCENT has improved earnings per share by 31.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALCATEL-LUCENT swung to a loss, reporting -$1.45 versus $0.37 in the prior year. This year, the market expects an improvement in earnings (-$0.72 versus -$1.45).
- Net operating cash flow has increased to -$150.95 million or 48.56% when compared to the same quarter last year. Despite an increase in cash flow, ALCATEL-LUCENT's average is still marginally south of the industry average growth rate of 49.82%.
- 36.96% is the gross profit margin for ALCATEL-LUCENT which we consider to be strong. 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 -6.30% is in-line with the industry average.
- You can view the full analysis from the report here: ALU Ratings Report