NEW YORK (TheStreet) -- Shares of Russian telecommunications company Mobile Telesystems (MBT) were down 12.72% to $6.04 in morning trading Tuesday as the ruble continued to plunge despite Russia's central bank's interest rate hike.
The bank increased its interest rates to 17% from 10.5% just four days after it raised the rate to 10.5% from 8%.
But the measure did not stop the ruble's plunge, as the currency plummeted 19% on Tuesday, according to Bloomberg. The ruble fell to as weak as 80.10 per dollar, a record low, before it recovered to 72.90 by 5:18 p.m. in Moscow.
Russians hurriedly converted their currency into dollars amid worries that the government would institute currency controls.
TheStreet Ratings team rates MOBILE TELESYSTEMS OJSC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOBILE TELESYSTEMS OJSC (MBT) 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 expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MOBILE TELESYSTEMS OJSC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, MOBILE TELESYSTEMS OJSC increased its bottom line by earning $2.34 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($69.45 versus $2.34).
- The gross profit margin for MOBILE TELESYSTEMS OJSC is currently very high, coming in at 70.39%. Regardless of MBT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.92% trails the industry average.
- The revenue fell significantly faster than the industry average of 58.3%. Since the same quarter one year prior, revenues fell by 43.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 55.2% when compared to the same quarter one year ago, falling from $582.32 million to $260.98 million.
- Net operating cash flow has decreased to $738.50 million or 49.00% 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: MBT Ratings Report