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TheStreet Open House

Why China Digital TV Holding (STV) Stock Is Up Today

Stocks in this article: STV

NEW YORK (TheStreet) -- China Digital TV Holding  (STV) rose 10.22% to $3.45 at 12:46 p.m. on Wednesday after the company declared a special cash dividend of 50 cents a share on its ordinary shares.

Each of China Digital's American Depositary Shares (ADS) represents one ordinary share. Shareholders of record as of the close of business on April 14 will be eligible to receive the dividend, which should be paid on or around May 9. This is the fifth time the company has declared a dividend since its IPO in 2007.

"China Digital TV is always looking to provide excellent value to our shareholders and we believe that a special dividend is a prudent use of cash at this time," said Chairman and CEO Jianhua Zhu in a statement. "Our balance sheet and revenue remain strong enough to support our continued focus on R&D and other long-term objectives."

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TheStreet Ratings team rates CHINA DIGITALTV HLDG CO -ADS as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHINA DIGITALTV HLDG CO -ADS (STV) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • STV's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 11.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • STV's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.98, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Computers & Peripherals industry and the overall market on the basis of return on equity, CHINA DIGITALTV HLDG CO -ADS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • CHINA DIGITALTV HLDG CO -ADS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CHINA DIGITALTV HLDG CO -ADS increased its bottom line by earning $0.41 versus $0.12 in the prior year. For the next year, the market is expecting a contraction of 21.9% in earnings ($0.32 versus $0.41).
  • You can view the full analysis from the report here: STV Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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