NEW YORK (TheStreet) -- TW Telecom (TWTC) rose to a 52-week high of $40.51 on Monday after Level 3 Communications (LVLT) announced it would acquire the Internet services provider for $40.86 a share in a cash-and-stock deal.
The deal is valued at approximately $5.64 billion. Under the terms of the offer, TW Telecom shareholders would receive $10 in cash and 0.7 Level 3 shares.
TW Telecom stock was up 7.21% to $38.96 at 11:20 a.m. More than 7.5 million shares had changed hands by that point, nearly 10 times the average volume of 757,572.
Separately, TheStreet Ratings team rates TW TELECOM INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TW TELECOM INC (TWTC) 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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TWTC's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 7.1%. 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.
- Net operating cash flow has increased to $115.23 million or 41.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.50%.
- The gross profit margin for TW TELECOM INC is rather high; currently it is at 57.37%. Regardless of TWTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.39% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Telecommunication Services industry. The net income has significantly decreased by 25.5% when compared to the same quarter one year ago, falling from $13.14 million to $9.79 million.
- You can view the full analysis from the report here: TWTC Ratings Report