NEW YORK (TheStreet) -- Shares of Gol Linhas Aereas Inteligentes (GOL) are sharply up 10.32% to $5.13 on heavy volume in late morning trading Thursday, after the Brazil-based transportation company was upgraded to "buy" from "neutral" by analysts at Bank of America/Merrill Lynch this morning.
Yesterday, GOL Linhas reported its domestic load factor of 79.9% in November, as domestic demand increased by 6% during the month and 7.8% for the year.
In November, the number of paid passengers transported in the domestic market was 3.2 million, 5.1% higher compared to November of last year.
Gol Linhas is a holding company primarily engaged in the passenger air transportation sector.
About 2.15 million shares of Gol Linhas have traded hands as of 11:11 a.m., compared to its average trading volume of about 1.83 million shares a day.
Separately, TheStreet Ratings team rates GOL LINHAS AEREAS INTELIGENT as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOL LINHAS AEREAS INTELIGENT (GOL) a SELL. This is driven by several 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 generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 31.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, GOL maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
- 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 Airlines industry and the overall market, GOL LINHAS AEREAS INTELIGENT's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$31.39 million or 109.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for GOL LINHAS AEREAS INTELIGENT is rather low; currently it is at 22.08%. Regardless of GOL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, GOL's net profit margin of -12.42% significantly underperformed when compared to the industry average.
- The revenue fell significantly faster than the industry average of 29.0%. Since the same quarter one year prior, revenues fell by 21.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: GOL Ratings Report