Alcatel-Lucent (ALU): Heavy Pre-Market Activity

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.

Trade-Ideas LLC identified Alcatel-Lucent ( ALU) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Alcatel-Lucent as such a stock due to the following factors:

  • ALU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.6 million.
  • ALU traded 701,287 shares today in the pre-market hours as of 8:36 AM, representing 10.2% of its average daily volume.

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More details on ALU:

Alcatel-Lucent provides Internet protocol (IP) and cloud networking, and ultra-broadband fixed and wireless access to service providers and their customers, enterprises, and institutions worldwide. The company operates in three segments: Core Networking, Access, and Other. The stock currently has a dividend yield of 5.3%. Currently there are 4 analysts that rate Alcatel-Lucent a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Alcatel-Lucent has been 9.1 million shares per day over the past 30 days. Alcatel-Lucent has a market cap of $11.0 billion and is part of the technology sector and telecommunications industry. Shares are down 10.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alcatel-Lucent as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 105.37% and other important driving factors, this stock has surged by 186.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ALCATEL-LUCENT reported significant earnings per share improvement 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, ALCATEL-LUCENT continued to lose money by earning -$0.80 versus -$1.56 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.80).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has declined marginally to $670.46 million or 1.08% when compared to the same quarter last year. Despite a decrease in cash flow ALCATEL-LUCENT is still fairing well by exceeding its industry average cash flow growth rate of -16.02%.
  • The debt-to-equity ratio is very high at 2.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ALU's quick ratio is somewhat strong at 1.07, demonstrating the ability to handle short-term liquidity needs.

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