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NEW YORK (TheStreet) -- China Mobile Games (CMGE) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHINA MOBILE GAMES -ADR (CMGE) a SELL. This is driven by a few notable 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. The area that we feel has been the company's primary weakness has been its disappointing return on equity."
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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. 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.
- 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. Along with this, the net profit margin of 19.85% is above that of the industry average.
- Net operating cash flow has significantly increased by 96.05% to -$0.04 million when compared to the same quarter last year. In addition, CHINA MOBILE GAMES -ADR has also vastly surpassed the industry average cash flow growth rate of 42.82%.
- 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.
- This stock has increased by 100.00% 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 CMGE 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: CMGE Ratings Report