SouFun (SFUN) Stock Closes Up After Shanghai Composite Breaks 5000

NEW YORK (TheStreet) -- Shares of SouFun (SFUN) gained 3.8% to close at $8.53 on heavy trading volume Friday after the Shanghai Composite Index reached its highest level since January 2008.

The Shanghai market closed up 1.5% at 5,023.10 on Friday, reaching about 5,000 for the first time in more than seven years, according to the Wall Street Journal. The market closed above 5,000 Friday after the Shanghai index fell 5% midday on Thursday.

The milestone mark for the index helped bring up a number of Chinese stocks.

SouFun is a Chinese online real estate portal. The company also operates websites dedicated to home furnishing and improvement.

About 12.9 million shares of SouFun were traded during trading hours Friday, above the company's average trading volume of about 10.4 million shares a day.

TheStreet Ratings team rates SOUFUN HLDGS LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOUFUN HLDGS LTD (SFUN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for SOUFUN HLDGS LTD is rather high; currently it is at 67.15%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SFUN's net profit margin of 4.94% is significantly lower than the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SOUFUN HLDGS LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.05 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SFUN has managed to keep a strong quick ratio of 2.05, which demonstrates the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 89.58% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
  • You can view the full analysis from the report here: SFUN Ratings Report

More from Markets

Dow Falls Sharply as Wall Street Weighs Trump's New Trade Threats

Dow Falls Sharply as Wall Street Weighs Trump's New Trade Threats

Boeing Slides as China Premier Li Says Willing to Continue Talks With Airbus

Boeing Slides as China Premier Li Says Willing to Continue Talks With Airbus

Intel Gets a Downgrade Following CEO Resignation

Intel Gets a Downgrade Following CEO Resignation

Jim Cramer: Reports of Attempted Trade Truce With China Are False

Jim Cramer: Reports of Attempted Trade Truce With China Are False

Ford and General Motors 'Notably Vulnerable' to Trade War: Moody's

Ford and General Motors 'Notably Vulnerable' to Trade War: Moody's