The stock plunged Thursday after Bloomberg reported that the premium cable television channel could not find a buyer and billionaire John Malone, who controls Starz, was considering alternatives to a sale.
CBS (CBS) , Lions Gate Entertainment (LGF) , AMC Networks (AMCX) , and 21st Century Fox (FOXA) were some of the media companies that considered purchasing Starz, but the prospective buyers concluded the asking price was too high, according to Bloomberg.
More than 1.5 million shares had changed hands as of 10:17 a.m., compared to the daily average volume of 966,066.
Separately, TheStreet Ratings team rates STARZ as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate STARZ (STRZA) 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- STARZ has improved earnings per share by 18.6% 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, STARZ increased its bottom line by earning $2.04 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($2.22 versus $2.04).
- STRZA, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The debt-to-equity ratio is very high at 22.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, STRZA's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has declined marginally to $47.20 million or 3.55% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: STRZA Ratings Report