European Stock Indices Edge Lower as Ukrainian Crisis Heightens

LONDON (The Deal) -- European stock indices edged lower on Monday as the Ukraine crisis escalated and investors braced for new European Union sanctions against Russia for its perceived support of separatists.

Reports said Ukrainian forces withdrew from Luhansk airport in eastern Ukraine following clashes with pro-Russian rebels. Meanwhile, Russia called for an immediate cease-fire, and German Chancellor Angela Merkel signaled further sanctions, even while acknowledging they could harm the European economy.

Geopolitical worries appear to be affecting the U.K.'s strong recovery. Markit Economics said its Purchasing Managers' Index in the U.K. fell to the lowest in more than a year in August. The gauge unexpectedly dropped to 52.5, the lowest since June 2013, from 54.8 the previous month. In the eurozone Markit's PMI fell more than expected to 50.7 from 51.8.

In London, the FTSE 100 was down 0.02% at 6,818.17. In Frankfurt, the DAX slipped 0.05% to 9,465.26 and in Paris the CAC 40 declined 0.25% to 4,370.24.

In London, ITV was up about 2.3% after the Sunday Telegraph said Liberty Global had been sounding out the U.K. terrestrial commercial TV broadcaster's U.S. shareholders to canvas support for a possible bid. Liberty Global spent 481 million pounds to buy a 6.4% stake in ITV from British Sky Broadcasting Group in July and said at the time it had no plans to mount a bid.

But Britain's leading food retailer, Tesco, declined further after the company gave a profit warning on Friday, and fund manager Harris Associates cut its stake and questioned Tesco's strategy. The stock was down about 1.5% by early afternoon Monday in London.

Sports media company Perform Group was up more than 26% at 257.60 pence on news that 42.5% owner Access Industries had made a buyout offer for the outstanding shares. Access, a vehicle of Len Blavatnik, has offered 260 pence per share, valuing the whole of Perform's equity at 683.5 million pounds ($799.4 million).

In Paris, wireless services provider Iliad fell 4.8% on reports it's trying to revive a bid for Deutsche Telekom's majority-owned U.S. unit T-Mobile U.S. (TMUS) in conjunction with private equity investors.

Advertising company Havas was up more than 2% on better-than-forecast first-half figures released late Friday, which showed strong growth in Europe.

In Zurich, drugmaker Novartis rose more than 4% after the company announced positive news over the weekend from trials of a new heart failure medicine.

In Seoul, South Korea, Samsung Heavy Industries closed up 6.2% and Samsung Engineering closed up 12.5% on news that Samsung Heavy offered to buy out its separately listed sister company in a deal valuing Samsung Engineering at 2.5 trillion won ($2.5 billion).

In Tokyo, the Nikkei 225 closed up 0.34% at 15,476.80. In Hong Kong, the Hang Seng edged up 0.04% to 24,752.09.

The HSBC Holdings/Markit Economics purchasing managers' index in China rose less than expected in August, lifting mainland Chinese indices on hopes the government will introduce stimuli to boost growth.

Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates T-MOBILE US INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate T-MOBILE US INC (TMUS) 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 solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 2500.00% and other important driving factors, this stock has surged by 28.95% over the past year, outperforming the rise in the S&P 500 Index during the same period.
  • T-MOBILE US INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.49 versus -$0.10).
  • 48.95% is the gross profit margin for T-MOBILE US INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TMUS's net profit margin of 5.44% significantly trails the industry average.
  • Compared to other companies in the Wireless Telecommunication Services industry and the overall market on the basis of return on equity, T-MOBILE US INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite the current debt-to-equity ratio of 1.58, it is still below the industry average, suggesting that this level of debt is acceptable within the Wireless Telecommunication Services industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.01 is sturdy.

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