Why World Wrestling Entertainment (WWE) Is Down Today

NEW YORK (TheStreet) --World Wrestling Entertainment (WWE) was falling 1.6% to $11.09 Monday following statements that launching the WWE Network hurt TV rights negotiations.

In a conference call with analysts WWE said its new deal with NBCUniversal  (CMCSA) is a "good deal," but is not what the company wanted. Chairman and CEO Vince McMahon said he was "disappointed" with the deal according to The Fly on the Wall.

During the call WWE admitted that launching the WWE Network when it did hurt those TV negotiations. The company noted, however, that a delay would have forced it to wait another full year before the network could launch. The company currently expects to have between 2.5 million and 3.5 million subscribers to the WWE Network in 2015.

WWE said it estimates TV deals in the U.S., U.K., Thailand, and India to reach about $200 million annually, a $90 million increase from previous contracts.

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TheStreet Ratings team rates WORLD WRESTLING ENTMT INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate WORLD WRESTLING ENTMT INC (WWE) 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 solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

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

  • WWE's revenue growth trails the industry average of 14.9%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • WWE's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WWE has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for WORLD WRESTLING ENTMT INC is currently lower than what is desirable, coming in at 28.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.36% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$9.40 million or 59.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: WWE 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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