Why Globalstar (GSAT) Stock Is Down In After-Hours Trading

NEW YORK (TheStreet) -- Shares of Globalstar Inc.  (GSAT) are down -2.22% to $3.96 after it disclosed in an SEC filing that it's proposing to sell $9.9 million worth of shares on behalf of Hughes Network Systems, a subsidiary of EchoStar Corporation  (SATS)

Must Read: Warren Buffett's 25 Favorite Stocks

In August 2013, Globalstar entered into an agreement with Hughes Network Systems which allowed Hughes, at their sole option, to elect to receive shares of the company's voting common stock in lieu of cash related to certain milestone payments under Globalstar's 2008 contract with Hughes for ground network equipment and software upgrades and satellite interface chips.

Separately, TheStreet Ratings team rates GLOBALSTAR INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate GLOBALSTAR INC (GSAT) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share."

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

  • 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 899.0% when compared to the same quarter one year ago, falling from -$25.08 million to -$250.54 million.
  • GLOBALSTAR INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GLOBALSTAR INC reported poor results of -$0.96 versus -$0.29 in the prior year. This year, the market expects an improvement in earnings (-$0.38 versus -$0.96).
  • 49.68% is the gross profit margin for GLOBALSTAR INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1220.00% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 812.75% to $3.80 million when compared to the same quarter last year. In addition, GLOBALSTAR INC has also vastly surpassed the industry average cash flow growth rate of 1.50%.
  • Compared to its closing price of one year ago, GSAT's share price has jumped by 606.66%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in GSAT do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: GSAT Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

Global Stocks Slide as Trump's New Trade War Salvo Ignites Fresh Concern

Global Stocks Slide as Trump's New Trade War Salvo Ignites Fresh Concern

Ackman Investment Buoys Lowe's; DraftKings Responds to FanDuel Merger -- ICYMI

Ackman Investment Buoys Lowe's; DraftKings Responds to FanDuel Merger -- ICYMI

Replay: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Replay: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Red Robin Slumps After Earnings Miss

Red Robin Slumps After Earnings Miss