NEW YORK (TheStreet) -- zipRealty (ZIPR) shares more than doubled in value, rising 122% to $6.71, on heavy volume Wednesday after the company entered into a definitive merger agreement with Realogy Holdings (RLGY), who will acquire the company for $6.75 per share.
The total value of the deal is approximately $166 million.
TheStreet Ratings team rates ZIPREALTY INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZIPREALTY INC (ZIPR) a SELL. This is driven by multiple 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 unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."
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 Real Estate Management & Development industry. The net income has significantly decreased by 33.6% when compared to the same quarter one year ago, falling from -$2.17 million to -$2.90 million.
- Net operating cash flow has significantly decreased to -$2.71 million or 79.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of ZIPREALTY INC has not done very well: it is down 8.52% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Management & Development industry and the overall market, ZIPREALTY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite the weak revenue results, ZIPR has outperformed against the industry average of 32.8%. Since the same quarter one year prior, revenues fell by 11.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: ZIPR Ratings Report