MeetMe (MEET) Sinks Ahead of Earnings Report

NEW YORK (TheStreet) -- MeetMe (MEET) is plunging in Thursday's session, a day before reporting earnings for its fourth quarter.

By midafternoon, shares had slipped 5.4% to $3.68.

The micro-cap has been a heavy trader on markets this year. Its three-month average volume is 1.84 million and shares have rallied 101.1% since January.

New Hope, Penn.-based MeetMe is due to report before the bell Friday. Analysts surveyed by Thomson Reuters anticipate a net loss of 2 cents a share and $13 million in revenue in the three months to December.

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

"We rate MEETME INC (MEET) a SELL. This is driven by several weaknesses, 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 an overall disappointing return on equity."

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

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, MEETME INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MEETME INC has improved earnings per share by 42.9% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MEETME INC continued to lose money by earning -$0.18 versus -$0.44 in the prior year. For the next year, the market is expecting a contraction of 50.0% in earnings (-$0.27 versus -$0.18).
  • MEET, with its decline in revenue, underperformed when compared the industry average of 16.5%. Since the same quarter one year prior, revenues fell by 13.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Although MEET's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 42.6% when compared to the same quarter one year prior, rising from -$2.59 million to -$1.49 million.

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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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