Glu Mobile (GLUU) Stock Started With 'Perform" Rating at Oppenheimer

Glu Mobile (GLUU) stock was initiated with a 'perform' rating at Oppenheimer on Thursday.
By Amanda Albright ,

NEW YORK (TheStreet) -- Oppenheimer began coverage on Glu Mobile  (GLUU) - Get Report stock with a "perform" rating on Thursday.

The San Francisco-based entertainment company has one of the broadest portfolios among public mobile gaming stocks, but near-term headwinds will keep the shares down, according to Oppenheimer. 

"Glu has successfully transformed itself from a company entirely dependent on licensed games for feature phones to one with a broadening mix of licensed and owned intellectual properties (IPs) in multiple genres for smartphones and tablets," the firm said.

Glu faces challenges such as weakness in its most recent releases, but revenue growth should resume in the second half of 2016, Oppenheimer added.

Shares of Glu were down by 1.26% to $3.13 in early-morning trading on Thursday.

Separately, TheStreet Ratings team rates GLU MOBILE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate GLU MOBILE INC (GLUU) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

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

  • The revenue growth greatly exceeded the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 37.3%. 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.
  • GLUU 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 3.12, which clearly demonstrates the ability to cover short-term cash needs.
  • GLU MOBILE INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GLU MOBILE INC turned its bottom line around by earning $0.07 versus -$0.28 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus $0.07).
  • Net operating cash flow has significantly decreased to -$1.17 million or 123.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, GLUU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: GLUU

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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