NEW YORK (TheStreet) -- Qihoo 360 Technology Co. (QIHU) stock is up by 1.56% to $72.93 in mid-morning trading on Friday, after the company announced that it is being privatized in a $9.3 billion deal.
An investor group, which includes Ping An Insurance, New China Capital and Sequoia Capital China, offered $77 per share in cash to buy out the company, Qihoo said in a statement on Friday.
The deal is expected to close in the first half of 2016.
Since they are less expensive than China-traded companies, Chinese companies that trade on U.S. exchanges have made about $30 billion worth of privatization deals in 2015, according to Bloomberg.
Based in Beijing, Qihoo is a Internet company that provides mobile security products, advertising services and entertainment services.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate QIHOO 360 TECHNOLGY CO -ADR as a Hold with a ratings score of C. 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 robust revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 37.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- QIHOO 360 TECHNOLGY CO -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QIHOO 360 TECHNOLGY CO -ADR increased its bottom line by earning $1.71 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($3.64 versus $1.71).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The gross profit margin for QIHOO 360 TECHNOLGY CO -ADR is currently very high, coming in at 83.46%. Regardless of QIHU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.55% trails the industry average.
- Currently the debt-to-equity ratio of 1.50 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.54, which shows the ability to cover short-term cash needs.
- You can view the full analysis from the report here: QIHU