10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Sprint Might Be Running a Slow Race to Ruin

April 17, 2013 | About:
Muhammad Bazil

Muhammad Bazil

3 followers
There comes a time when investors must take a strong look at their stock and make an informed decision on the value of that stock. Unfortunately, on occasion, the facts show that the invested stock is not worth the ongoing financial risks associated with it. Such is the case with Sprint (S).

Sprint Nextel Corporation has shown little promise of yielding a return after years of slow decline. One financial report shows that since 1998, the stock has fallen severely by 82.01%. Such a close margin to a total decline should not be ignored. However, the decline in stock is not the only indication that the investor should sell. If one looks at the net profit margin one will see that the margin as of today is negative 14.68%, the operating margin is negative 7.83% and the return on average assets is negative 10.55%. Everywhere there should be green plus signs, one is finding nothing but the red minus sign of decline.

But the fact that over the past 10 years the stock has fallen drastically, should not serve as the sole determining factor of whether you should sell your shares. A more recent assessment of Sprint Nextel Corporation’s finances yields the same disheartening results. Today the stock fell by 0.32%, and the day before it also fell. Over the past years the stock has shown little promise of turning around, much less giving a substantial return on any investment as one can see when looking at the $6.25 high and $2.30 low. Nasdaq reports that the loss per share is $1.45. This is not to say that Sprint is the only company which has shown faults in its stock options.YHOh900 has shown a similar decline in stock options and T.MX (At&T) has had some recent bumps. The difference in these stocks is that they have fluctuated where Sprint has shown nothing but a slow and steady decline.

Perhaps one of the best indicators of the need to sell your stock can be seen when looking at one of the top competitors. Verizon (VZ) has shown increasing promise over the years and continues to climb. If one compares the day’s stocks, the contrast is disconcerting. Where Sprint closed today at $6.23 (which, by the way, is close to its high), Verizon Wireless closed at $49.26.

One reason that the stock has declined could be the fact that the company has limited itself to strictly wireless services. Granted, the company does offer its services in all 50 states and then some other countries, but those services hold little ground when competing with other companies (such as Verizon Wireless and AT&T), which have branched out to other services than wireless. Should Sprint invest in providing other more needed and global services at an appropriate speed, the company might have a slim chance of stabilizing its stock options. This is very unlikely given the financial state of the company and stocks at the present time. Based upon the trend, it is more likely that Sprint will split its shares or sell to a larger company; neither of these potential situations is ideal for the investor.

This is a stock that investors should sell. There is no accumulated value to be gained in owning a stock that is showing signs of total decline. Any stock that shows a near-83% decline should be a stock that the investor does not hold for very long. It is true that sellers will probably not receive much money back from the original investment. However, the question that must be addressed is whether or not the stock has the potential to yield even a small harvest on your investment. In this instance, I would say no. New investors should stay away from this stock as it has proven to be a negative investment. Those investors that have already acquired Sprint stock are urged to relieve their portfolio of this potential danger. A ship that is sinking has only but a short time until it is utterly useless. It would be wise to get something for your investment before it is too late.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

Rating: 3.0/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK