NEW YORK (TheStreet) -- Shares of Viggle (VGGL) were gaining 12.3% to $1.93 on heavy trading volume after the entertainment marketing company announced preliminary results for the fiscal fourth quarter and fiscal year 2015.
Viggle said it expects to report revenue of about $6.9 million for the fiscal fourth quarter, a 30% increase from the year-ago quarter. The company expects revenue of about $35.6 million for fiscal 2015, a 42% increase from fiscal 2014.
The company said it expects an adjusted EBITDA loss of about $6.2 million in the fourth quarter and about $29.6 million in the fiscal year.
Viggle expects to report is full year financial results no later than September 28.
The company said it added almost 600,000 users in the fiscal fourth quarter, bringing its net registered users to more than 9.5 million, up from 5.4 million at the end of fiscal year 2014.
"Increased advertising on the Viggle app led to our substantial growth in revenue this quarter," CFO John Small said in a statement. "Our aggressive and consistent marketing efforts over the past year helped to drive those advertising revenues to the current levels."
About 2.9 million shares of Viggle were traded by 9:47 a.m. Thursday, above the company's average trading volume of about 2.2 million shares a day.
TheStreet Ratings team rates VIGGLE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIGGLE INC (VGGL) a SELL. This is driven by multiple 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 deteriorating net income, generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Internet Software & Services industry. The net income has significantly decreased by 45.8% when compared to the same quarter one year ago, falling from -$14.14 million to -$20.61 million.
- The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.14, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to -$8.92 million or 66.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- VGGL'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 42.14%, 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, VIGGLE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: VGGL Ratings Report