Why Marchex (MCHX) Stock Is Down Today

NEW YORK (TheStreet) -- Marchex  (MCHX) fell on Thursday after the mobile advertising technology company priced the offering of shares of its common stock.

Marchex will sell 5,714,000 shares of Class B stock at $10.50 a share.

The stock was down 7.18% to $10.34 at 1:36 p.m.

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TheStreet Ratings team rates MARCHEX INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARCHEX INC (MCHX) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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

  • MCHX's revenue growth has slightly outpaced the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 16.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MCHX 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. To add to this, MCHX has a quick ratio of 2.41, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 38.86% is the gross profit margin for MARCHEX INC which we consider to be strong. Regardless of MCHX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCHX's net profit margin of 1.52% is significantly lower than the industry average.
  • Powered by its strong earnings growth of 101.96% and other important driving factors, this stock has surged by 180.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • 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 Internet Software & Services industry and the overall market, MARCHEX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MCHX 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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