LightInTheBox (LITB) Stock Soaring on Aokang Stake Purchase

NEW YORK (TheStreet) -- Shares of LightInTheBox (LITB) are rallying by 9.34% to $5.62 on heavy trading volume after the company said that shoe and leather products maker Zhejiang Aokang Shoes agreed to acquire a stake in the Chinese online retailer.

"We are pleased to team up with LightInTheBox to jointly-develop a global 'Internet-Plus' strategy for traditional businesses by leveraging their deep understanding of global ecommerce and superior technological expertise," Aokang's Chairman Zhentao Wang said in a statement.

Under the terms, Aokang has agreed to acquire a 25.66% equity interest from investors at $66.40 per share, and plans to invest $77.3 million in the company.

Aokang said it plans to set up a unit in Hong Kong for $2.58 million, according to Reuters.

About 3.2 million shares were traded by 1:25 pm on Wednesday, above the company's trading volume of about 147,000 shares a day.

Separately, TheStreet Ratings team rates LIGHTINTHEBOX HLDG -ADR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate LIGHTINTHEBOX HLDG -ADR (LITB) 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."

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

  • LIGHTINTHEBOX HLDG -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, LIGHTINTHEBOX HLDG -ADR reported poor results of -$0.61 versus -$0.16 in the prior year. For the next year, the market is expecting a contraction of 4.9% in earnings (-$0.64 versus -$0.61).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 134.2% when compared to the same quarter one year ago, falling from -$9.23 million to -$21.60 million.
  • 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 & Catalog Retail industry and the overall market, LIGHTINTHEBOX HLDG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LIGHTINTHEBOX HLDG -ADR is currently lower than what is desirable, coming in at 34.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -24.65% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$9.86 million or 196.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: LITB Ratings Report

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