NEW YORK (TheStreet) -- Shares of Hill International (HIL) were gaining 29.9% to $5.08 on heavy trading volume on Monday morning after private equity firm DC Capital Partners offered to acquire the management services company.
In a letter sent to the company, DC Capital Partners offered to acquire Hill International for $5.50 a share. The price represents a 40.7% premium over the company's closing price on Friday, May 1.
DC Capital Partners said it is impressed with Hill International's recovery from its recent Libya liquidity predicament. "However, we remain concerned with the company's disproportionate exposure to the Middle East region," the firm said.
About 1.3 million shares of Hill International were traded by 10:22 a.m. Monday, above the company's average trading volume of about 127,000 shares a day.
TheStreet Ratings team rates HILL INTERNATIONAL INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HILL INTERNATIONAL INC (HIL) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 16.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.83, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, HIL has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
- 39.60% is the gross profit margin for HILL INTERNATIONAL INC which we consider to be strong. Regardless of HIL'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 -2.05% trails the industry average.
- 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 Professional Services industry. The net income has significantly decreased by 175.2% when compared to the same quarter one year ago, falling from -$1.27 million to -$3.48 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Professional Services industry and the overall market, HILL INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: HIL Ratings Report