Why Majesco Entertainment (COOL) Stock Is Soaring Today

NEW YORK (TheStreet) -- Shares of Majesco Entertainment Co. (COOL) are higher 14.45% to $0.435 on Wednesday after the video game company and Atari announced a partnership to launch an e-gaming platform where players can gamble using real money, Reuters reports.

The online casino is slated to launch in Q4 2014. The casino will be based around classic Atari video games like Pong, Centipede, Asteroids and others.

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

"We rate MAJESCO ENTERTAINMENT CO (COOL) a SELL. This is driven by a few notable 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 110.7% when compared to the same quarter one year ago, falling from -$2.14 million to -$4.51 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, MAJESCO ENTERTAINMENT CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MAJESCO ENTERTAINMENT CO is rather low; currently it is at 15.45%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -20.57% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1.02 million or 88.36% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: COOL Ratings Report

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