NEW YORK (TheStreet) -- GFI Group (GFIG) shares are up 8.7% to $5.47 on Tuesday, a day after the stock rose 11% in trading on three times in normal volume, after BGC Partners (BGCP) announced that it is making a $675 million cash hostile takeover bid offer for the company.
BGC's offer comes less than two months after CME Group (CME) announced that it had agreed to acquire GFI in a $580 million deal.
Brokerage Firm BGC already owns a 13.5% stake in the wholesale brokerage services provider.
The tender offer would pay shareholders $5.25 per share in cash, beating CME's offer of $4.55 per share.
Commenting on the CME Group deal, BGC CEO Howard Lutnik said, "The pending transaction with CME deprives GFI shareholders of the appropriate value of their investment... (It) allows GFI management to purchase the brokerage business from CME at a discount."
TheStreet Ratings team rates GFI GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GFI GROUP INC (GFIG) 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 good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 542.07% to $32.31 million when compared to the same quarter last year. In addition, GFI GROUP INC has also vastly surpassed the industry average cash flow growth rate of -89.01%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- GFIG, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 11.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Capital Markets industry and the overall market, GFI GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GFI GROUP INC is currently extremely low, coming in at 1.76%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -46.12% is significantly below that of the industry average.
- You can view the full analysis from the report here: GFIG Ratings Report
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