NEW YORK ( TheStreet) -- Glu Mobile (Nasdaq: GLUU) has been downgraded by TheStreet Ratings from hold to sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity. Highlights from the ratings report include:
- 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 Software industry and the overall market, GLU MOBILE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GLU MOBILE INC is currently very high, coming in at 78.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -9.90% is in-line with the industry average.
- GLUU 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. To add to this, GLUU has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
- This stock has increased by 147.84% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in GLUU do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- GLU MOBILE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GLU MOBILE INC continued to lose money by earning -$0.37 versus -$0.60 in the prior year. This year, the market expects an improvement in earnings (-$0.27 versus -$0.37).