Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Sky-mobi

(

MOBI

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sky-mobi as such a stock due to the following factors:

  • MOBI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.9 million.
  • MOBI has traded 964,877 shares today.
  • MOBI is down 3.2% today.
  • MOBI was up 6.1% yesterday.

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More details on MOBI:

Sky-mobi Limited, through its subsidiaries, is engaged in the operation of a mobile application platform embedded on mobile phones to provide mobile application store and services in the People's Republic of China. MOBI has a PE ratio of 83.2.

The average volume for Sky-mobi has been 685,800 shares per day over the past 30 days. Sky-mobi has a market cap of $238.9 million and is part of the technology sector and computer software & services industry. Shares are up 127.7% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sky-mobi as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • MOBI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.79, which clearly demonstrates the ability to cover short-term cash needs.
  • The revenue fell significantly faster than the industry average of 11.6%. Since the same quarter one year prior, revenues fell by 26.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SKY-MOBI LTD -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SKY-MOBI LTD -ADR is currently lower than what is desirable, coming in at 25.37%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.99% significantly trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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