NEW YORK (TheStreet) -- VisionChina Media (VISN) was rising 28.19% to $31.01 on Wednesday after the company announced that it had signed a deal to promote Baidu's online gaming division in China.
VisionChina, an outdoor digital marketing company, announced that it would work exclusively with Baidu as its digital mobile television partner and would promote the brand on buses and in subways in 2014. The company said in its statement that it could reach buses in 88 cities and subways in 14 cities throughout China.
Baidu is an online gaming service in which users can play third-party games.
"We rate VISIONCHINA MEDIA INC (VISN) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for VISIONCHINA MEDIA INC is currently lower than what is desirable, coming in at 27.78%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, VISN's net profit margin of -12.98% significantly underperformed when compared to the industry average.
- Despite the current debt-to-equity ratio of 1.68, it is still below the industry average, suggesting that this level of debt is acceptable within the Media industry. Despite the fact that VISN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- 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 Media industry and the overall market, VISIONCHINA MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- VISIONCHINA MEDIA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, VISIONCHINA MEDIA INC reported poor results of -$48.65 versus -$2.40 in the prior year.
- VISN, with its decline in revenue, underperformed when compared the industry average of 2.3%. Since the same quarter one year prior, revenues fell by 14.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: VISN Ratings Report
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