Why Liberty Global (LBTYA) Stock May Gain Today

NEW YORK (TheStreet) -- Liberty Global's  (LBTYA) John Malone, in a move to expand in TV programs and production, purchased a stake in ITV, the U.K.'s largest commercial broadcaster with top-rated shows, Bloomberg reports.

Liberty Global acquired 6.4% of ITV from Rupert Murdoch's British Sky Broadcasting Group  (BSYBY) for 481 million pounds, or $824 million. Liberty Global said it doesn't plan to make a full takeover bid for now, Bloomberg said.

Shares of Liberty Global closed up at $44.47 yesterday.

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TheStreet Ratings team rates LIBERTY GLOBAL PLC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LIBERTY GLOBAL PLC (LBTYA) a SELL. This is driven by some concerns, 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, generally high debt management risk, generally disappointing historical performance in the stock itself 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 Media industry. The net income has significantly decreased by 7780.0% when compared to the same quarter one year ago, falling from -$1.00 million to -$78.80 million.
  • Although LBTYA's debt-to-equity ratio of 3.82 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.43, which clearly demonstrates the inability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.57%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 5200.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • LIBERTY GLOBAL PLC 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIBERTY GLOBAL PLC reported poor results of -$2.38 versus -$2.33 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus -$2.38).
  • 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 Media industry and the overall market, LIBERTY GLOBAL PLC'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: LBTYA Ratings Report

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