NEW YORK (TheStreet) -- Shares of InterCloud Systems, Inc. (ICLD) are surging 12.74% to $6.55 in pre-market trading on Friday after it announced over $23 million in new purchase orders for 2014.
The three segments seeing an influx in orders include: cloud and managed service, applications and infrastructure, and professional services.
Separately, TheStreet Ratings team rates INTERCLOUD SYSTEMS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTERCLOUD SYSTEMS INC (ICLD) 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 disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, INTERCLOUD SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$3.28 million or 1340.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- ICLD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.71%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- The gross profit margin for INTERCLOUD SYSTEMS INC is currently lower than what is desirable, coming in at 27.95%. Regardless of ICLD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ICLD's net profit margin of 47.28% significantly outperformed against the industry.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that ICLD's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: ICLD Ratings Report