Rating Change #2
Giant Interactive Group Inc
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 20.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- GA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, GA has a quick ratio of 2.46, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, GIANT INTERACTIVE GROUP -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Compared to its closing price of one year ago, GA's share price has jumped by 58.80%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
Giant Interactive Group Inc. develops and operates online games in the People's Republic of China. It primarily offers multiplayer online role playing games (MMORPGs). The company operates 11 games, including nine MMORPGs, one casual massively multiplayer online game, and one strategy browser game. The company has a P/E ratio of 10.7, below the S&P 500 P/E ratio of 17.7. Giant Interactive Group has a market cap of $1.51 billion and is part of the services sector and diversified services industry. Shares are up 18.1% year to date as of the close of trading on Friday.
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