NEW YORK (TheStreet) -- Shares of Home Inns & Hotels Management Inc. (HMIN) are higher by 5.80% to $29.57 on Tuesday after reporting an increase in net income and revenue for the 2014 first quarter.

Net income for China's leading economy hotel chain was RMB 74.9 billion ($12 million), compared to a net loss of RMB 19.4 million from the 2013 first quarter.

Home Inns said non-GAAP EBITDA was RMB 296.8 million ($47.8 million) versus RMB 187.4 million for the same period last year.

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The company's total revenue increased 5% year-over-year to RMB $1.47 billion ($236.9 million) from RMB 1.40 billion.

TheStreet Ratings team rates HOME INNS & HOTELS MNGT as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate HOME INNS & HOTELS MNGT (HMIN) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year."

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

  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 15.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HOME INNS & HOTELS MNGT reported significant earnings per share improvement 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HOME INNS & HOTELS MNGT turned its bottom line around by earning $0.63 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($10.88 versus $0.63).
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, HOME INNS & HOTELS MNGT's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, HMIN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • You can view the full analysis from the report here: HMIN Ratings Report
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