VimpelCom (VIP) Stock Is Up Today on Stronger Ruble

NEW YORK (TheStreet) -- Shares of VimpelCom (VIP) were gaining 6.3% to $3.90 on Thursday as the Russian ruble began to stabilize.

The ruble rallied following remarks from President Vladimir Putin that cautiously endorsed the Russian central bank's policy, according to the Wall Street Journal. Putin called the central banks' actions, which included raising its key interest rate to 17%, "on the whole appropriate," though he noted that "some things could have been done more urgently."

The ruble to dollar exchange rate steadied around 61 following the end-of-year news conference.

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The Amsterdam-based VimpelCom operates one of the largest mobile networks in Russia. Shares of the company fell during the ruble's recent decline, but recovered as the currency strengthened.

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 some concerns, 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 58.8% when compared to the same quarter one year ago, falling from $255.00 million to $105.00 million.
  • The debt-to-equity ratio is very high at 3.52 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, VIP maintains a poor quick ratio of 0.76, 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 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 declined marginally to $1,610.00 million or 3.88% when compared to the same quarter last year. Despite a decrease in cash flow of 3.88%, VIMPELCOM LTD is in line with the industry average cash flow growth rate of -13.59%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 67.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • You can view the full analysis from the report here: VIP Ratings Report

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