Why Orbcomm (ORBC) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of ORBCOMM Inc.  (ORBC) are down -5.64% to $6.36 after Space Exploration Technologies, or SpaceX, postponed its rocket launch with Orbcomm satellites, due to a technical glitch on June 20.

The launch was intended to put six of Orbcomm's 17 next generation satellites into orbit of about 500 miles above Earth, according to Reuters.

Orbcomm is paying a cut-rate $47 million for two SpaceX flights, the second of which is slated for launch later this year, Reuters said.

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Separately, TheStreet Ratings team rates ORBCOMM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ORBCOMM INC (ORBC) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. 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:

  • The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 15.7%. 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.
  • ORBC's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.96, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ORBCOMM INC is rather high; currently it is at 52.99%. Regardless of ORBC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORBC's net profit margin of -2.22% significantly underperformed when compared to 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 138.9% when compared to the same quarter one year ago, falling from $1.11 million to -$0.43 million.
  • 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, ORBCOMM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ORBC Ratings Report
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