Stock To Watch: Gogo (GOGO) In Perilous Reversal

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 $28.9 million.
  • GOGO has traded 84,214 shares today.
  • GOGO is down 3.2% today.
  • GOGO was up 10.6% 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 1.5 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 33% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gogo as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • GOGO has underperformed the S&P 500 Index, declining 9.59% from its price level of one year ago. 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 of 1.02 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 (-$0.93 versus -$1.32).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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