Why YOU On Demand (YOD) Is Gaining Today

NEW YORK (TheStreet) -- YOU On Demand (YOD) was gaining 9.6% to $5.39 Thursday after signing deals with HiT Entertainment, Sesame Workshop, and Nelvana Enterprises to launch a new service in China.

The Chinese media company will sue the deals to offer popular children's shows and titles through the new YOU Kids On Demand subscription service. The YOU Kids service will launch later this year, when the company will detail it further.

All three deals allow for digital cable, mobile, IPTV, and Internet distribution of content.

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TheStreet Ratings team rates YOU ON DEMAND HOLDINGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate YOU ON DEMAND HOLDINGS INC (YOD) 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. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

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

  • Net operating cash flow has declined marginally to -$2.77 million or 1.20% when compared to the same quarter last year. Despite a decrease in cash flow YOU ON DEMAND HOLDINGS INC is still fairing well by exceeding its industry average cash flow growth rate of -11.37%.
  • 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, YOU ON DEMAND HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that YOD's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
  • Investors have driven up the company's shares by 220.12% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in YOD do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • YOU ON DEMAND HOLDINGS INC has improved earnings per share by 21.4% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YOU ON DEMAND HOLDINGS INC continued to lose money by earning -$1.24 versus -$1.50 in the prior year. This year, the market expects an improvement in earnings (-$0.72 versus -$1.24).
  • You can view the full analysis from the report here: YOD Ratings Report

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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.

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