Why Glu Mobile (GLUU) Is Jumping Today

NEW YORK (TheStreet) -- Glu Mobile (GLUU) was jumping 23.5% to $4.78 on Thursday following fourth-quarter earnings that far surpassed analysts' estimates.

The mobile game company reported earnings of 7 cents a share for the fourth quarter, while analysts surveyed by Thomson Reuters expected the company to break even. Glu Mobile's revenue grew 62% to $42.8 million, compared to analysts' estimates of $32.1 million.

Looking to the first quarter, Glu Mobile said it expects earnings of between 1 cent and 2 cents a share, while analysts expect a break-even quarter. The company expects revenue of between $38 million and $40 million for the quarter ending in March. Analysts estimate sales of $29..1 million for the quarter.

Must read: Glu Reports Fourth Quarter And Full Year 2013 Financial Results

TheStreet Ratings team rates GLU MOBILE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about its recommendation:

"We rate GLU MOBILE INC (GLUU) a SELL. This is driven by some concerns, 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 and weak operating cash flow."

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 Software industry. The net income has significantly decreased by 123.6% when compared to the same quarter one year ago, falling from -$3.56 million to -$7.97 million.
  • Net operating cash flow has significantly decreased to -$5.89 million or 130.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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 rather high; currently it is at 68.68%. Regardless of GLUU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GLUU's net profit margin of -36.68% significantly underperformed when compared to the industry average.
  • GLUU, with its decline in revenue, underperformed when compared the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 16.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: GLUU Ratings Report

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