NEW YORK (TheStreet) — Cellcom Israel (NYSE:CEL) has been downgraded by TheStreet Ratings from hold to sell. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Wireless Telecommunication Services industry. The net income has significantly decreased by 61.7% when compared to the same quarter one year ago, falling from $73.98 million to $28.32 million.

Despite any intermediate fluctuations, we have only bad news to report on this stock’s performance over the last year: it has tumbled by 69.29%, worse than the S&P 500′s performance. Consistent with the plunge in the stock price, the company’s earnings per share are down 62.16% compared to the year-earlier 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.

The debt-to-equity ratio is very high at 24.02 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, CEL’s quick ratio is somewhat strong at 1.48, demonstrating the ability to handle short-term liquidity needs.

CELLCOM ISRAEL LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CELLCOM ISRAEL LTD reported lower earnings of $2.17 versus $3.65 in the prior year. This year, the market expects an improvement in earnings ($4.30 versus $2.17).

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 Wireless Telecommunication Services industry and the overall market, CELLCOM ISRAEL LTD’s return on equity significantly exceeds that of both the industry average and the S&P 500.

Cellcom Israel Ltd. provides cellular communications services in Israel. It offers basic and advanced cellular telephone services, text and multimedia messaging services, and advanced cellular content and data services. The company has a P/E ratio of 3.4, equal to the average telecommunications industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cellcom Israel has a market cap of $622.8 million and is part of the technology sector and telecommunications industry. Shares are down 59.7% year to date as of the close of trading on Wednesday…Read More>>

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