Why LiveDeal (LIVE) Stock Is Soaring Today

NEW YORK (TheStreet) -- LiveDeal (LIVE) stock is soaring Wednesday after the company announced it will be added to Morgan Stanley Capital International's (MSCI) exclusive Global Index, an opportunity to gain worldwide recognition in global financial markets. 

"In a rebalancing of MSCI's global indices, LiveDeal is being added to the MSCI US Micro Cap Index, and with it, investors should see greater liquidity, and price appreciation," the company wrote in a statement. "LiveDeal should benefit greatly from being added to the exclusive list of companies that will garner worldwide attention from large pension plans, hedge funds, asset managers, and banks."

The company's addition will be effective by close of market May 30. 

By early afternoon, shares had spiked 34% to $5.08.

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

"We rate LIVEDEAL INC (LIVE) 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:

  • 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 Internet Software & Services industry and the overall market, LIVEDEAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LIVEDEAL INC is currently very high, coming in at 79.60%. Regardless of LIVE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LIVE's net profit margin of -68.80% significantly underperformed when compared to the industry average.
  • Net operating cash flow has slightly increased to -$0.24 million or 7.25% when compared to the same quarter last year. Despite an increase in cash flow, LIVEDEAL INC's cash flow growth rate is still lower than the industry average growth rate of 23.25%.
  • LIVEDEAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIVEDEAL INC reported poor results of -$0.66 versus -$0.26 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.66).
  • LIVE 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
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