NEW YORK (TheStreet) -- Shares of SouFun(SFUN) - Get Report were gaining 12% to $8.28 Friday after the city of Beijing raised its limit for home purchase loans made through the housing public accumulation fund.
Beijing raised the ceiling of housing public accumulation fund loans to 1.2 million yuan (about $193,000) from 800,000 yuan ($130,000) amid a stagnant housing market, according to Xinhua. The housing public accumulation fund includes money intended for long-term housing savings contributed by companies and employees every month.
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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, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SFUN's revenue growth trails the industry average of 28.8%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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 75.88%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SFUN's net profit margin of 32.01% significantly outperformed against the industry.
- 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.
- SOUFUN HLDGS LTD's earnings per share declined by 42.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOUFUN HLDGS LTD increased its bottom line by earning $0.71 versus $0.37 in the prior year. For the next year, the market is expecting a contraction of 22.6% in earnings ($0.55 versus $0.71).
- You can view the full analysis from the report here: SFUN Ratings Report