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Phoenix New Media Ltd Stock Upgraded (FENG)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Phoenix New Media (NYSE: FENG) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • FENG's revenue growth trails the industry average of 33.5%. Since the same quarter one year prior, revenues slightly increased by 8.0%. 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.
  • FENG 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. Along with this, the company maintains a quick ratio of 4.87, which clearly demonstrates the ability to cover short-term cash needs.
  • When compared to other companies in the Internet Software & Services industry and the overall market, PHOENIX NEW MEDIA LTD -ADR's return on equity is below that of both the industry average and the S&P 500.
  • Looking at the price performance of FENG's shares over the past 12 months, there is not much good news to report: the stock is down 48.19%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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 company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet Software & Services industry average. The net income has decreased by 21.1% when compared to the same quarter one year ago, dropping from $5.81 million to $4.58 million.
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Phoenix New Media Limited provides content on an integrated platform across Internet, mobile, and TV channels in the People's Republic of China. The company has a P/E ratio of 18.8, above the S&P 500 P/E ratio of 17.7. Phoenix New Media has a market cap of $307.8 million and is part of the technology sector and internet industry. Shares are up 9.6% year to date as of the close of trading on Thursday.

You can view the full Phoenix New Media Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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