Alcatel-Lucent (ALU) Stock Rises Ahead of Earnings Release

NEW YORK (TheStreet) -- Alcatel-Lucent (ALU)  shares are climbing 1.54% to $3.62 on Wednesday ahead of the global telecommunications equipment company's third quarter fiscal 2015 earnings results due out before the opening bell on Thursday. 

Overall, analysts are predicting the company's profit and revenue to grow year-over-year.

Analysts' earnings estimate for the latest quarter is 3 cents a share and revenue forecast is $3.92 billion.

In the third quarter of fiscal 2014, the company earned 2 cents a share on revenue of $3.25 billion.

Separately, Nokia's (NOK) $16.6 billion acquisition of Alcatel-Lucent could be completed at the end of this fiscal year, Barron's.com said. 

Based in France, Alcatel-Lucent provides Internet protocol (IP) and cloud networking, and ultra- broadband access worldwide.

Separately, TheStreet Ratings team rates ALCATEL-LUCENT as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate ALCATEL-LUCENT (ALU) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

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

  • ALCATEL-LUCENT reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALCATEL-LUCENT continued to lose money by earning -$0.02 versus -$0.74 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$0.02).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 84.5% when compared to the same quarter one year prior, rising from -$407.33 million to -$63.21 million.
  • 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 Communications Equipment industry and the overall market on the basis of return on equity, ALCATEL-LUCENT has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Powered by its strong earnings growth of 85.71% and other important driving factors, this stock has surged by 52.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The debt-to-equity ratio is very high at 2.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ALU's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: ALU

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