What to Expect When VimpelCom (VIP) Reports Third-Quarter Earnings Wednesday

NEW YORK (TheStreet) -- Shares of VimpelCom  (VIP) were down 2.89% to $5.72 in morning trading Tuesday ahead of the company's scheduled third-quarter earnings report before the market open Wednesday. Here's what analysts are expecting from the telecommunications company.

The consensus estimate calls for the company to report revenue of $5.02 billion. In the third-quarter last year, VimpelCom reported earnings of 16 cents a share, which came up well short of the expectation of 29 cents a share from analysts polled by Thomson Reuters. Revenue totaled $5.685 billion, which missed the consensus estimate of $5.778 billion.

In the second quarter 2014, revenue totaled $5.067 billion, which came up short of analysts' expectations of $5.105 billion.

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Separately, TheStreet Ratings team rates VIMPELCOM LTD as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate VIMPELCOM LTD (VIP) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 82.5% when compared to the same quarter one year ago, falling from $573.00 million to $100.00 million.
  • The debt-to-equity ratio is very high at 3.38 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, VIP has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Wireless Telecommunication Services industry and the overall market, VIMPELCOM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $1,102.00 million or 20.83% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, VIMPELCOM LTD has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 81.81% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: VIP Ratings Report

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