NEW YORK (TheStreet) -- Shares of NQ Mobile (NQ) were gaining by 39.3% to $4.22 on heavy trading volume on Thursday, after the mobile software company announced agreements to sell its FL Mobile and NationSky businesses.

NQ Mobile said it entered into a legally binding framework agreement to sell its entire stake in FL Mobile to Tsinghua Holdings' subsidiary Beijing Jinxing Rongda Investment Management for "no less than" 4 billion yuan, or about $626 million. The final price is subject to the valuation of an independent third party.

In a separate announcement the mobile software company said it will sell all of its interest in NationSky to Hou Shuli, a founder and senior management member of Beijing NationSky, for an aggregate of $80 million. The divestment is expected to close within 60 days.

About 4.5 million shares of NQ Mobile were traded by 10:02 a.m. Thursday, well above the company's average trading volume of about 1.8 million shares a day.

TheStreet Recommends

Separately, TheStreet Ratings team rates NQ MOBILE INC -ADR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate NQ MOBILE INC -ADR (NQ) a SELL. This is driven by a few notable weaknesses, 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 disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."

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

  • 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 Software industry and the overall market, NQ MOBILE INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NQ MOBILE INC -ADR is rather low; currently it is at 21.04%. It has decreased significantly from the same period last year.
  • NQ's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 50.37%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • NQ MOBILE INC -ADR has improved earnings per share by 44.1% 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, NQ MOBILE INC -ADR reported poor results of -$0.98 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.32 versus -$0.98).
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.63 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: NQ Ratings Report