Trade-Ideas: VimpelCom (VIP) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified VimpelCom ( VIP) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified VimpelCom as such a stock due to the following factors:

  • VIP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.4 million.
  • VIP has traded 64,136 shares today.
  • VIP is down 4.3% today.
  • VIP was up 5.1% yesterday.

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More details on VIP:

VimpelCom Ltd. provides telecommunications services in Italy, Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh, and Pakistan. The stock currently has a dividend yield of 0.5%. Currently there are 3 analysts that rate VimpelCom a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for VimpelCom has been 2.0 million shares per day over the past 30 days. VimpelCom has a market cap of $10.2 billion and is part of the technology sector and telecommunications industry. Shares are up 32.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates VimpelCom as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 5.08 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 0.81, which illustrates the inability to avoid short-term cash problems.
  • VIP has underperformed the S&P 500 Index, declining 22.67% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has decreased to $1,399.00 million or 30.39% 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 -42.14%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • The gross profit margin for VIMPELCOM LTD is currently very high, coming in at 73.95%. Regardless of VIP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VIP's net profit margin of -20.29% significantly underperformed when compared to the industry average.

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