Gogo (GOGO) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Gogo ( GOGO) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Gogo as such a stock due to the following factors:

  • GOGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • GOGO has traded 155,705 shares today.
  • GOGO is down 3% today.
  • GOGO was up 5.7% yesterday.

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More details on GOGO:

Gogo Inc. provides in-flight Internet connectivity and wireless in-cabin digital entertainment solutions in the United States and internationally. GOGO has a PE ratio of 2.6. Currently there are 4 analysts that rate Gogo a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Gogo has been 2.1 million shares per day over the past 30 days. Gogo has a market cap of $1.4 billion and is part of the technology sector and telecommunications industry. Shares are down 28.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gogo as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.00 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, GOGO has managed to keep a strong quick ratio of 2.05, which demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, GOGO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 49.57% is the gross profit margin for GOGO INC which we consider to be strong. Regardless of GOGO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GOGO's net profit margin of -18.75% significantly underperformed when compared to the industry average.
  • GOGO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOGO INC reported poor results of -$1.32 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings (-$0.92 versus -$1.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 66.7% when compared to the same quarter one year prior, rising from -$55.99 million to -$18.66 million.

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