NEW YORK (TheStreet) -- Shares of Gogo Inc. (GOGO) are higher by 7.15% to $16.27 in early afternoon trading on Thursday, as American Airlines (AAL) announces that it is adding Gogo's inflight wireless services to all of its two-class regional jets.
Gogo is a company that provides in-flight connectivity and wireless in-cabin digital entertainment solutions.
Almost 250 American Airlines' regional aircraft will have in-flight wireless Internet service installed by 2016. American Airlines said the move is designed to enhance its customers' travel experience.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
American said the addition of Gogo's service will allow the company to deliver "a regional product that's better than our competitors."
Separately, TheStreet Ratings team rates GOGO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOGO INC (GOGO) a SELL. This is driven by a few notable weaknesses, 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 unimpressive growth in net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 Internet Software & Services industry. The net income has significantly decreased by 33.0% when compared to the same quarter one year ago, falling from -$18.72 million to -$24.90 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
- The debt-to-equity ratio of 1.45 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 2.15, which demonstrates the ability to cover short-term cash needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 31.81% 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.
- GOGO INC's earnings per share declined by 31.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse 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 (-$1.01 versus -$1.32).
- You can view the full analysis from the report here: GOGO Ratings Report