NEW YORK (TheStreet) -- Shares of InterCloud Systems (ICLD) were gaining 11.4% to $2.06 Monday after the cloud networking orchestration and automation provider announced it signed a new professional services contract with a Tier 1 communications service provider.

InterCloud said its signed a contract to be the prime vendor for outsourced professional services and support for their wireline and wireless next generation voice, data, and transport infrastructure solutions for "one of the world's largest Tier 1 communications service providers based in the United States."

The contract term is for three year with two one-year options, and is expected to be at least $9 million during the base term, with expansion to over $15 million. The contract award is effective immediately and transition of service is now underway.

"This is the single largest contract InterCloud has ever been awarded," CEO Mark Munro said. "Winning a multi-year agreement of this scale from a global leader in communications is a clear sign that InterCloud is positioned as a leader in our market segments."

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 multiple 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 deteriorating net income, disappointing return on equity, 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 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 IT Services industry. The net income has significantly decreased by 200.1% when compared to the same quarter one year ago, falling from $10.35 million to -$10.35 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
  • Despite the current debt-to-equity ratio of 1.60, 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 0.65 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 59.28%, 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.
  • 35.13% is the gross profit margin for INTERCLOUD SYSTEMS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -49.32% is in-line with the industry average.
  • You can view the full analysis from the report here: ICLD Ratings Report