NEW YORK (TheStreet) -- Shares of AutoNavi Holdings Ltd. (AMAP) are up 2.49% to $20.55 after it was announced that the Chinese digital mapping and navigation firm agreed to be acquired by e-commerce firm Alibaba Group Holding Ltd. in a deal valuing the company at about $1.5 billion.
Alibaba owns 28% of AutoNavi, and offered to buy the company in February to expand its product offerings to better compete with rivals Tencent Holdings Ltd. and Baidu Inc. (BIDU - Get Report), Reuters reports.
AutoNavi said the company's shareholders will receive $5.25 per ordinary share, or $21 per American Depositary Share, a premium of 4.7% to AutoNavi's closing price on the Nasdaq yesterday.
TheStreet Ratings team rates AUTONAVI HLDG LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AUTONAVI HLDG LTD (AMAP) 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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, AMAP's share price has jumped by 88.28%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- AMAP 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 7.59, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue fell significantly faster than the industry average of 11.4%. Since the same quarter one year prior, revenues fell by 27.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- AUTONAVI HLDG LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, AUTONAVI HLDG LTD swung to a loss, reporting -$0.44 versus $0.73 in the prior year. For the next year, the market is expecting a contraction of 162.5% in earnings (-$1.16 versus -$0.44).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 424.6% when compared to the same quarter one year ago, falling from $8.69 million to -$28.21 million.
- You can view the full analysis from the report here: AMAP Ratings Report