NEW YORK (TheStreet) -- Shares of General Cable (BGC) ended the regular session sharply higher by 21.27% to $17.73 on heavy volume Tuesday, following reports that the world's largest cable maker, Prysmian (PRYMY), is considering an acquisition of its rival to increase its North American market share, according to Bloomberg.
Although there have not been any talks between the two companies, Prysmian has held preliminary talks about a potential bid for General Cable with financial advisers, Bloomberg added.
A spokesman for Prysmian said the company is evaluating "all growth options" and has no talks ongoing with General Cable, according to Reuters.
About 7.86 million shares of General Cable have exchanged hands as of 4:32 p.m. ET today, compared to its average trading volume of about 664,007 shares a day.
Shares are down 1.52% to $17.46 in after-hours trading.
Highland Heights, KY-based General Cable is engaged in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for use in the energy, industrial, construction, specialty and communications markets.
The company also engages in the design, integration, and installation on a turn-key basis for products, such as high and extra-high voltage terrestrial and submarine systems.
Separately, TheStreet Ratings team rates GENERAL CABLE CORP/DE as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GENERAL CABLE CORP/DE (BGC) 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, poor profit margins 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 Electrical Equipment industry. The net income has significantly decreased by 1108.7% when compared to the same quarter one year ago, falling from $13.80 million to -$139.20 million.
- The debt-to-equity ratio is very high at 2.81 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, BGC maintains a poor quick ratio of 0.83, 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 Electrical Equipment industry and the overall market, GENERAL CABLE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GENERAL CABLE CORP/DE is currently extremely low, coming in at 6.64%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.99% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1159.25% 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.
- You can view the full analysis from the report here: BGC Ratings Report