Why VisionChina Media (VISN) Stock Is Soaring Today

NEW YORK (TheStreet) -- Shares of VisionChina Media Inc. (VISN) are higher by 22.77% to $17.68 on heavy trading volume on Monday afternoon, following the company's announcement that it formed a strategic partnership with Huawei Technology Co.

VisionChina, one of the largest out-of-home digital TV advertising networks on mass transit systems in China, and Huawei, a provider of information and communications technology solutions, have come together to initiate joint research and development regarding mass transit WIFI and potential overseas mass transit WIFI cooperation.

The partnership with Huawei comes after the company's recently announced partnership with China Unicom (CHU), as part of its efforts to expand its national WIFI strategy and build one of the world's largest national WIFI networks for public transit.

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

"We rate VISIONCHINA MEDIA INC (VISN) 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 company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

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

  • Although VISN's debt-to-equity ratio of 2.26 is very high, it is currently less than that of the industry average. To add to this, VISN has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for VISIONCHINA MEDIA INC is currently extremely low, coming in at 3.85%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, VISN's net profit margin of -33.83% significantly underperformed when compared to the industry average.
  • 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 Media industry and the overall market, VISIONCHINA MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VISIONCHINA MEDIA INC has improved earnings per share by 48.8% 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 year. During the past fiscal year, VISIONCHINA MEDIA INC continued to lose money by earning -$4.72 versus -$48.65 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 48.8% when compared to the same quarter one year prior, rising from -$14.55 million to -$7.46 million.
  • You can view the full analysis from the report here: VISN Ratings Report
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