NQ Mobile (NQ) In A Perilous Reversal

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

  • NQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.0 million.
  • NQ has traded 1.4 million shares today.
  • NQ is down 3.2% today.
  • NQ was up 5.4% yesterday.

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More details on NQ:

NQ Mobile Inc. provides mobile Internet services in the areas of mobile security, privacy, productivity, personalized cloud, and family protection. It operates through two segments, Consumer and Enterprise. NQ has a PE ratio of 36.2. Currently there is 1 analyst that rates NQ Mobile a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NQ Mobile has been 4.0 million shares per day over the past 30 days. NQ Mobile has a market cap of $907.4 million and is part of the technology sector and computer software & services industry. Shares are up 15.7% year-to-date as of the close of trading on Monday.

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 NQ Mobile as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • NQ's very impressive revenue growth greatly exceeded the industry average of 10.9%. Since the same quarter one year prior, revenues leaped by 110.1%. 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.
  • NQ 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 4.14, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, NQ's share price has jumped by 151.58%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 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 881.6% when compared to the same quarter one year ago, falling from $0.35 million to -$2.72 million.
  • 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, NQ MOBILE INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.

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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