NEW YORK (TheStreet) -- Alcatel-Lucent (ALU) was gaining 1.5% to $3.32 Wednesday after announcing a deal with Globe Telecom (GLO) to upgrade the wireless network infrastructure in the Philippine regions of Visayas and Mindanao.
The French telecommunications company will upgrade the WiMax 4G network in the two regions to LTE-TDD and LTE-FDD technologies. The new technologies will provide higher network capacity, faster transmission speeds, and higher bandwidth to help support more users.
Under the agreement, Globe will deploy Alcatel-Lucent's LTE Radio Access Network which should help bring wireless Internet access to people in the "geographically diverse area comprised of 7,107 islands."
"This project not only highlights how our LTE-TDD technology is expanding, but also continues the strong momentum of mobile ultra-broadband access in the Asia-Pacific region," Alcatel-Lucent CEO Michel Combes said.
TheStreet Ratings team rates ALCATEL-LUCENT as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALCATEL-LUCENT (ALU) 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 impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ALCATEL-LUCENT reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALCATEL-LUCENT continued to lose money by earning -$0.76 versus -$1.56 in the prior year. This year, the market expects an improvement in earnings (-$0.05 versus -$0.76).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 64.8% when compared to the same quarter one year prior, rising from -$1,158.23 million to -$407.33 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- In its most recent trading session, ALU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio is very high at 2.39 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ALU maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: ALU Ratings Report
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