Why YY (YY) Is Falling In After-Hours Trading Monday

NEW YORK (TheStreet) -- YY (YY) was falling 2.2% to $79.68 in after-hours trading Tuesday after the company announced it a proposed offering of $400 million of convertible senior notes.

The convertible senior notes are due in 2019, and are subject to market conditions and other factors. Underwriters Citigroup (C), Deutsche Bank (DB), and Morgan Stanley (MS) all have a 30-day option to buy an additional $60 million.

Holders will have the right to require YY to buy back the note on April 1, 2017. The notes will mature on April 1, 2019.

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TheStreet Ratings team rates YY INC -ADR as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate YY INC -ADR (YY) 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 notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

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

  • Compared to other companies in the Internet Software & Services industry and the overall market, YY INC -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • YY's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 136.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • YY 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 3.23, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 495.6% when compared to the same quarter one year prior, rising from $5.41 million to $32.23 million.
  • The gross profit margin for YY INC -ADR is rather high; currently it is at 51.53%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.19% significantly outperformed against the industry average.
  • You can view the full analysis from the report here: YY 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.

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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