Why Elephant Talk Communications (ETAK) Is Down Today

NEW YORK (TheStreet) -- Elephant Talk Communications  (ETAK) fell 9.55% to $1.23 at 2:20 p.m. on Tuesday after the company, which provides Software Defined Network Architecture (Software DNA 2.0) platforms and cyber security solutions, announced a delay in its reporting of fourth-quarter and full-year earnings.

Elephant Talk had scheduled its report and investor conference call for Tuesday, March 18 but elected to postpone those two events to have more time to review its financial results for the fourth quarter and full year 2013, "including how its losses to date, when combined with the Company's recently completed financing efforts would impact the company's liquidity position," according to a press release.

The conference call is now scheduled for Wednesday, March 26 at 11 a.m. ET.

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TheStreet Ratings team rates ELEPHANT TALK COMM INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ELEPHANT TALK COMM INC (ETAK) a SELL. This is based on the dominance of unfavorable investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow."

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

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, ELEPHANT TALK COMM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.39 million or 676.14% 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, ETAK 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Telecommunication Services industry average, but is greater than that of the S&P 500. The net income increased by 41.1% when compared to the same quarter one year prior, rising from -$5.48 million to -$3.23 million.
  • ETAK, with its decline in revenue, underperformed when compared the industry average of 2.3%. Since the same quarter one year prior, revenues fell by 22.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: ETAK Ratings Report

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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.

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