NEW YORK (TheStreet) -- China Mobile Games and Entertainment Group (CMGE) shares are jumping, up 11% to $18.87, in early market trading following the release of the company's first quarter earnings results.
The company reported a year over year 488.2% increase in quarterly revenue to $34.5 million, ahead of analysts consensus estimates of $30.23 million.
Net income for the quarter for the quarter was $5.6 million, a definite improvement from the $3.46 million net loss it posted during the same period in 2013.
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The mobile game developer reported 3.5 million paying user accounts for single players games and 1.1 million subscriptions for game bundles.
TheStreet Ratings team rates CHINA MOBILE GAMES -ADR as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHINA MOBILE GAMES -ADR (CMGE) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CMGE's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 405.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CMGE'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 3.71, which clearly demonstrates the ability to cover short-term cash needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Compared to other companies in the Software industry and the overall market, CHINA MOBILE GAMES -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$8.85 million or 313.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: CMGE Ratings Report
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