Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Turkcell Iletisim Hizmetleri AS (NYSE: TKC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- TURKCELL ILETISIM HIZMET has improved earnings per share by 11.1% 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, TURKCELL ILETISIM HIZMET increased its bottom line by earning $1.32 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $1.32).
- TKC's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.74, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $430.67 million or 5.06% when compared to the same quarter last year. Despite an increase in cash flow, TURKCELL ILETISIM HIZMET's average is still marginally south of the industry average growth rate of 8.21%.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Wireless Telecommunication Services industry average. The net income increased by 12.2% when compared to the same quarter one year prior, going from $316.86 million to $355.39 million.
- TKC has underperformed the S&P 500 Index, declining 19.88% from its price level of one year ago. 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.