NEW YORK (TheStreet) -- Shares of InterCloud Systems (ICLD) were plunging, down 17.81% to $3.37 on heavy trading volume mid-morning Tuesday, giving back some of yesterday's gains following the launch of its new platform.
On Monday, shares rallied to close at $4.10, a more than 53% gain on the day after the company announced its new NFVGrid, a Network Functions Virtualization Orchestration platform.
The platform uses open APIs to ensure its interoperability with different OSS/BSS platforms, cloud management systems, SDN controllers, and virtualized network function managers.
InterCloud CEO Mark Munro said, "Infonetics forecasts the carrier SDN and NFV market to reach $11 Billion by 2018. We have positioned InterCloud to be a competitive force in the emerging growth of Next-Generation IT and telecom networks."
About 4.42 million shares of InterCloud were traded by 10:23 a.m. Tuesday, compared to the company's average trading volume of about 1.98 million shares a day.
Red Bank, NJ-based InterCloud Systems, formerly Genesis Group, is a provider of information technology and next-generation network solutions to the telecommunications service provider and corporate enterprise markets through cloud platforms and professional services.
Separately, TheStreet Ratings team rates INTERCLOUD SYSTEMS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTERCLOUD SYSTEMS INC (ICLD) 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 poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for INTERCLOUD SYSTEMS INC is rather low; currently it is at 21.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -28.79% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$1.38 million or 206.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite the current debt-to-equity ratio of 1.52, it is still below the industry average, suggesting that this level of debt is acceptable within the IT Services industry. Despite the fact that ICLD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.60 is low and demonstrates weak liquidity.
- ICLD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 62.66%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- Compared to other companies in the IT Services industry and the overall market, INTERCLOUD SYSTEMS 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: ICLD Ratings Report