SouFun Holdings (SFUN) Stock Closes Higher Today Following China Central Bank Governor's Comments

Shares of SouFun Holdings (SFUN) closed higher Monday after China's central bank governor made some encouraging remarks that boosted the market of the world's most populous nation.
By Andrew Meola ,

NEW YORK (TheStreet) -- Shares of SouFun Holdings  (SFUN) - Get Report closed up 6.54% to $6.35 on Monday after China's central bank governor made some encouraging remarks that boosted the market of the world's most populous nation.

Zhou Xiaochuan, the governor of the People's Bank of China, said at a forum in the Chinese city of Boao on Sunday that that the U.S. dollar could grow "too strong" and lead to capital flows out of China and other nations.

The governor also said monetary easing by major central banks had pushed up the dollar. He added that he expects "more room" for China to further relax its policy if the economy remains soft and inflation continues to weaken, according to Reuters.

Furthermore, the PBOC governor cautioned about the threat of deflation in China, as the slowdown in consumer-price gains happened a little too quickly.

TheStreet Ratings team rates SOUFUN HLDGS LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOUFUN HLDGS LTD (SFUN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

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

  • SFUN's revenue growth trails the industry average of 18.6%. Since the same quarter one year prior, revenues slightly increased by 2.7%. 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.
  • The gross profit margin for SOUFUN HLDGS LTD is currently very high, coming in at 82.22%. Regardless of SFUN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SFUN's net profit margin of 37.00% significantly outperformed against the industry.
  • SFUN's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that SFUN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.20 is high and demonstrates strong liquidity.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SOUFUN HLDGS LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SFUN Ratings Report
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