China Mobile Games And Entertainment Group (CMGE) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified China Mobile Games and Entertainment Group ( CMGE) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified China Mobile Games and Entertainment Group as such a stock due to the following factors:

  • CMGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.3 million.
  • CMGE has traded 554,939 shares today.
  • CMGE is down 3% today.
  • CMGE was up 7.1% yesterday.

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More details on CMGE:

China Mobile Games and Entertainment Group Limited, through its subsidiaries, develops and publishes mobile games primarily in the People's Republic of China. It provides social games and single-player games for mobiles. CMGE has a PE ratio of 164.2. Currently there is 1 analyst that rates China Mobile Games and Entertainment Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for China Mobile Games and Entertainment Group has been 610,700 shares per day over the past 30 days. China Mobile Games and Entertainment Group has a market cap of $715.7 million and is part of the technology sector and computer software & services industry. Shares are down 2.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates China Mobile Games and Entertainment Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • CMGE's very impressive revenue growth greatly exceeded the industry average of 11.6%. Since the same quarter one year prior, revenues leaped by 275.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CMGE 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 this, the company maintains a quick ratio of 3.53, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CHINA MOBILE GAMES -ADR is rather high; currently it is at 61.03%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 19.85% trails 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. When compared to other companies in the Software industry and the overall market, CHINA MOBILE GAMES -ADR's return on equity is below that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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