Why Chinanet Online Holdings (CNET) Exploded Today

NEW YORK (TheStreet) -- Chinanet Online Holdings  (CNET) exploded to a one-year high of $2.75 on Wednesday as Chinese Internet stocks enjoyed a prosperous day.

Peer companies Sina Corporation  (SINA) and Baidu  (BIDU) rose 2.23% and 1.62%, respectively, at the close of the trading day. Baidu also rose nearly 8% in after-market trading after it reported its fourth-quarter and full-year results. 

Chinanet also announced that the China Center for Promotion of SME Development and China International Cooperation Association of Small and Medium Enterprises have nominated the company as a candidate for the "2013 Preferred Service Provider for China Small and Medium-sized Enterprises" award.

"We are proud to be selected as one of the premier service provider to SMEs," said CEO George Chu in the company's statement. "It validates our work in creating an excellent sales and marketing platform for SMEs. We will continue to introduce new products on our service platform to help franchise owners and SMEs become more successful."

The stock closed up 106.6% at $2.19, up $1.13 from its previous close of $1.06, and amassed a volume of 5,115,335, more than 86 times its average of 59,453. It hit a low of $1.11 for the day and holds a one-year low of 41 cents.

Must Read: ChinaNet Online Holdings Nominated As 2013 Preferred Service Provider For China SME

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TheStreet Ratings team rates CHINANET ONLINE HOLDINGS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHINANET ONLINE HOLDINGS (CNET) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, CNET's share price has jumped by 36.14%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • CNET's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CNET has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Media industry and the overall market on the basis of return on equity, CHINANET ONLINE HOLDINGS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • CHINANET ONLINE HOLDINGS reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CHINANET ONLINE HOLDINGS reported lower earnings of $0.13 versus $0.15 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Media industry. The net income has decreased by 5.0% when compared to the same quarter one year ago, dropping from $1.22 million to $1.16 million.
  • You can view the full analysis from the report here: CNET Ratings Report

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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