NEW YORK (TheStreet) -- Shares of AirMedia Group (AMCN) were gaining 15.4% to $3.47 on heavy trading volume Monday, continuing the Chinese advertising company's gains from the previous week.

About 2.3 million shares of AirMedia were traded by 11:36 a.m. Monday, well above the company's average trading volume of about 452,000 shares a day.

Last Wednesday, AirMedia announced that Beijing Shengshi Lianhe Advertising sold 5% of AirMedia's advertising business to Shenzen Liantronics for RMB 150 million, giving the division a total valuation of RMB 3 billion.

The company also recently announced that subsidiary Guangzhou Meizheng Advertising won a concession contract with Shanghai Railways Culture and Advertising Development. The contract gives the company the exclusive right to install and operate Wi-Fi systems on trains operated by the Shanghai Railway Bureau.

TheStreet Ratings team rates AIRMEDIA GROUP INC -ADS as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

TheStreet Recommends

"We rate AIRMEDIA GROUP INC -ADS (AMCN) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins."

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

  • AIRMEDIA GROUP INC -ADS 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 year. We anticipate that this should continue in the coming year. During the past fiscal year, AIRMEDIA GROUP INC -ADS reported poor results of -$0.44 versus -$0.18 in the prior year. For the next year, the market is expecting a contraction of 22.3% in earnings (-$0.54 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 Media industry. The net income has significantly decreased by 868.4% when compared to the same quarter one year ago, falling from $1.46 million to -$11.20 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Media industry and the overall market, AIRMEDIA GROUP INC -ADS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AIRMEDIA GROUP INC -ADS is currently extremely low, coming in at 11.86%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.02% is significantly below that of the industry average.
  • AMCN, with its decline in revenue, underperformed when compared the industry average of 7.2%. Since the same quarter one year prior, revenues fell by 14.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: AMCN Ratings Report

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