NEW YORK (TheStreet) -- Shares of nTelos Holdings (NTLS) closed higher by 30.32% to $8.08 after the Financial Times' "Alphaville" section reported that the wireless telecommunications company could be a takeover target.
Virginia-based Shenandoah Telecommunications (SHEN) is considering a takeover of nTelos that would cost approximately $200 million, the Times reports. This would equate to about $9.25 a share and would mark an approximately 50% premium to Tuesday's closing price of $6.20.
The two companies have quite a bit of overlap in the mid-Atlantic and Appalachian states that include Virginia, West Virginia, and Maryland.
nTelos' service area covered 5.3 million people as of 2013, which made it the ninth-largest provider of mobile broadband in the U.S.
More than 5.3 million shares changed hands as of 4 p.m., compared to the daily average volume of 473,752.
Separately, TheStreet Ratings team rates NTELOS HOLDINGS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate NTELOS HOLDINGS CORP (NTLS) a SELL. This is driven by a few notable weaknesses, 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 generally disappointing historical performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NTLS'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 57.40%, 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. 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.
- The gross profit margin for NTELOS HOLDINGS CORP is currently lower than what is desirable, coming in at 28.00%. Regardless of NTLS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.30% trails the industry average.
- The revenue fell significantly faster than the industry average of 67.0%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- NTELOS HOLDINGS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NTELOS HOLDINGS CORP swung to a loss, reporting -$2.54 versus $1.12 in the prior year. This year, the market expects an improvement in earnings (-$0.97 versus -$2.54).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 1050.5% when compared to the same quarter one year prior, rising from $1.29 million to $14.80 million.
- You can view the full analysis from the report here: NTLS Ratings Report