NEW YORK (TheStreet) -- Shares of YOU On Demand (YOD) were gaining 4.4% to $2.39 on heavy trading volume Tuesday after the Video on Demand service provider announced a new strategic partnership with mobile Internet company C Media.

Under the new agreement, YOU On Demand's YOU Cinema service will be available to train passengers using C Rail Wi-Fi, C Media's new railway Wi-Fi service platform in China. The C Rail W-Fi platform is currently available on 140 trains, and will come to about 1,000 trains as the rollout continues.

The two companies will work over the next six months to develop effective marketing and revenue models for the collaboration as it is rolled out.

"The captive nature of a train car where travellers have several hours of quiet and uninterrupted time blends itself seamlessly to watching high quality long form video such as Hollywood and domestic movies and other premium content," YOU On Demand CEO Weicheng Liu said in a statement.

About 3.4 million shares of YOU On Demand shares were traded by 2:34 p.m. Tuesday, above the company's average trading volume of about 438,000 shares a day.

TheStreet Ratings team rates YOU ON DEMAND HOLDINGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate YOU ON DEMAND HOLDINGS INC (YOD) a SELL. This is driven by a number of negative factors, 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 a generally disappointing historical performance in the stock itself."

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

  • YOD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.57%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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, YOU ON DEMAND HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$2.19 million or 28.75% when compared to the same quarter last year. Despite an increase in cash flow, YOU ON DEMAND HOLDINGS INC's cash flow growth rate is still lower than the industry average growth rate of 49.26%.
  • YOU ON DEMAND HOLDINGS 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, YOU ON DEMAND HOLDINGS INC reported poor results of -$1.72 versus -$0.89 in the prior year. This year, the market expects an improvement in earnings (-$0.66 versus -$1.72).
  • The gross profit margin for YOU ON DEMAND HOLDINGS INC is currently very high, coming in at 84.97%. 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 -245.59% is in-line with the industry average.
  • You can view the full analysis from the report here: YOD Ratings Report
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