Why Global Eagle Entertainment (ENT) Is Gaining Today

NEW YORK (TheStreet) -- Global Eagle Entertainment (ENT) was gaining 9.4% to $17.48 on Tuesday after it signed an agreement with China Air to start a trial of its Ku-band satellite Internet service.

The trial will let China Air passengers connect to the Internet with approved devices on a 777-200 aircraft sometime in 2014. Global Eagle will equip the plaesn with its Ku-band satellite service, and provide support for aeronautical certifications, training, and program management.

The two companies are currently in the process of gaining all required authorizations to bring the service to the 777-200 aircraft.

"We are honored Air China has selected Global Eagle to support such an important program for the airline," Global Eagle CEO John LaValle said in a press release. "As China's Flag Carrier, Air China is known around the world for their superior and innovative services, and Global Eagle appreciates the wonderful opportunity to work with them on providing their newest service enhancement to benefit passengers."

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TheStreet Ratings team rates GLOBAL EAGLE ENTERTAINMENT as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about its recommendation:

"We rate GLOBAL EAGLE ENTERTAINMENT (ENT) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ENT's very impressive revenue growth greatly exceeded the industry average of 16.5%. Since the same quarter one year prior, revenues leaped by 286.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although ENT's debt-to-equity ratio of 0.05 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.19, which illustrates the ability to avoid short-term cash problems.
  • GLOBAL EAGLE ENTERTAINMENT reported significant earnings per share improvement 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, GLOBAL EAGLE ENTERTAINMENT reported poor results of -$4.37 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings (-$0.94 versus -$4.37).
  • The gross profit margin for GLOBAL EAGLE ENTERTAINMENT is currently lower than what is desirable, coming in at 32.79%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ENT's net profit margin of -7.45% significantly underperformed when compared to the industry average.
  • 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 Internet Software & Services industry and the overall market, GLOBAL EAGLE ENTERTAINMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ENT Ratings Report

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