NEW YORK (TheStreet) -- GlU Mobile (GLUU) shares are up 8.9% to $5.85 on Friday following the success of the company's hit Kim Kardashian video game, Kim Kardashian: Hollywood.
The game has reached as high as second on Apple's (AAPL) App Store's free-to-play games list since its debut June 25 and could generate as much $200 million in revenue this year according to a Bloomberg report yesterday.
The game is fee to play but users have the choice of spending money inside the app on extras like virtual dollars to buy virtual clothes and pay for virtual trips.
TheStreet Ratings team rates GLU MOBILE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GLU MOBILE INC (GLUU) a SELL. This is driven by some concerns, 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 area that we feel has been the company's primary weakness has been its disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Software industry and the overall market, GLU MOBILE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GLU MOBILE INC is currently very high, coming in at 71.78%. Regardless of GLUU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GLUU's net profit margin of 0.29% is significantly lower than the industry average.
- Net operating cash flow has significantly increased by 201.38% to $3.79 million when compared to the same quarter last year. In addition, GLU MOBILE INC has also vastly surpassed the industry average cash flow growth rate of 10.44%.
- GLUU 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
- This stock has increased by 122.41% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in GLUU do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: GLUU Ratings Report