NEW YORK (TheStreet) -- Shares of AirMedia Group Inc. (AMCN) are declining by 8.38% to $3.66 in mid-morning trading on Wednesday, as the stocks of U.S. traded China-based companies continue to take a hit due to the ongoing struggle in the Chinese stock market.
AirMedia operates out-of-home advertising platforms in China.
China's economic uncertainty continues into Wednesday as companies hurried to escape the falling market by having their shares suspended. Indexes tumbled after the securities regulator warned a "panic sentiment" is taking hold of investors, Reuters reports.
China's stock markets, the Shanghai Composite Index and the Shenzhen, have been struggling since mid-June following a peak earlier this year. On Sunday, the country's government announced plans to help keep the market from suffering further losses, but this doesn't seem to be calming investors.
Beijing released another set of plans to battle the market sell-off and the People's Bank of China said it would increase support for brokers engaged in propping up shares, Reuters added.
Experts say the jump in the Chinese stock market earlier this year was due in part to average investors taking on debt in order to invest in stocks, CNNMoney.com reported. Last month, when stocks first began to fall investors had to sell their investments in a hurry in order to pay back the loans.
TheStreet's Jim Cramer. Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio had this to say about the situation in China: "I think that the Chinese market is opaque and worrisome and with more than 70% of the stocks halted many for being down the 10% limit, it can't be ignored as it does amount to a crash. The chart looks like nasdaq circa 2000 but the stocks are much cheaper. Still it's not like catching a falling knife, it's like catching 100 Steinways so I would not wade into it."
Separately, TheStreet Ratings team rates AIRMEDIA GROUP INC -ADS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AIRMEDIA GROUP INC -ADS (AMCN) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, AMCN's share price has jumped by 118.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- AMCN 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- AMCN, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- AIRMEDIA GROUP INC -ADS 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, AIRMEDIA GROUP INC -ADS reported poor results of -$0.44 versus -$0.18 in the prior year. For the next year, the market is expecting a contraction of 14.5% in earnings (-$0.50 versus -$0.44).
- 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 Media industry. The net income has significantly decreased by 62.0% when compared to the same quarter one year ago, falling from -$3.51 million to -$5.68 million.
- You can view the full analysis from the report here: AMCN Ratings Report