NEW YORK ( TheStreet) -- SouFun Holdings (NYSE: SFUN) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has not been very careful in the management of its balance sheet. Highlights from the ratings report include:
- Compared to other companies in the Internet Software & Services industry and the overall market, SOUFUN HOLDINGS LTD -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
- SFUN's very impressive revenue growth greatly exceeded the industry average of 25.8%. Since the same quarter one year prior, revenues leaped by 89.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SOUFUN HOLDINGS LTD -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.44 versus $0.72).
- In its most recent trading session, SFUN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors.
- Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, SFUN's quick ratio is somewhat strong at 1.26, demonstrating the ability to handle short-term liquidity needs.