NEW YORK (TheStreet) -- Shares of Russian telecommunications company VimpelCom (VIP) fell 5.66% to $4.17 in afternoon trading Wednesday amid continued economic distress in Russia tied to the ruble's significant decline.
The Russian government's statistics ministry, Rosstat, said Wednesday that inflation in the country will reach 11.4% for 2014, according to initial estimates, thanks to the currency's drop. This is up from 6.5% in 2013 and would mark the highest inflation figure since Russia's financial crisis in 2008.
The ministry added consumer prices climbed 2.6% in December, the month in which the ruble had some of its sharpest declines.
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Rosstat also said food prices rose 15.4%, non-food products 8.1%, and service charges 10.5%.
Rosstat plans to release the final inflation data on January 12.
Russia's economy shrank in November for the first time in five years, and the nation will likely enter a recession in the first quarter of 2015.
Separately, 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 a number of negative factors, 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 VIMPELCOM LTD is still fairing well by exceeding its industry average cash flow growth rate of -14.78%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.06%, 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