NEW YORK (TheStreet) -- West Corp. (WSTC) shares are down 5.87% to $30.17 in early market trading on Friday after the technology-enabled communication services provider announced a secondary public offering after the closing bell yesterday.

The Omaha, NE-based company announced an underwritten public offering of 7 million shares to be sold by investors related to Thomas H Lee Partners and Quadrangle Group.

Morgan Stanley (MS) will act as the underwriter for the offering.

TheStreet Ratings team rates WEST CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WEST CORP (WSTC) a SELL. This is driven by several 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. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has decreased to $53.12 million or 37.85% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • WEST CORP has improved earnings per share by 14.3% 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, WEST CORP reported lower earnings of $1.52 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $1.52).
  • The gross profit margin for WEST CORP is rather high; currently it is at 62.99%. Regardless of WSTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WSTC's net profit margin of 14.23% significantly outperformed against the industry.
  • The stock has risen over the past year at a faster pace than the S&P 500, reflecting the earnings growth of the company. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 73.9% when compared to the same quarter one year prior, rising from $46.28 million to $80.50 million.
  • You can view the full analysis from the report here: WSTC Ratings Report