Can NQ Mobile Deliver Better Results in the Long Run?

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Dec 21, 2014

Things are not moving smoothly at NQ Mobile (NQ, Financial). The company has been continually delivering weaker than expected results. However, management is still optimistic about a better performance in the future. The company is undertaking several strategies and initiatives to improve its performance. to restore its credibility, value and growth. Let's take a look.

Innovation and better management

NQ Mobile is now focusing on innovation. It is planning to bring new and different NQ Mobiles in the market. Its efforts seems concrete and it expects to continue improvement and good adaptation. All its growth efforts are aligned to match the specific needs of the company. It is also making changes in the organization and has recently added new directors to ensure smooth governance within the company also expecting to report it’s financial on time. With the new appointed officials, NQ Mobile is expecting improvement in its financials, driving the market share as well as enhancing the value of shareholders in future.

The company also has aggressive share buyback program in line. The company is expecting to improve its cash in hand on the balance-sheet making it more impressive. An attractive balance-sheet is always an attraction to the investors and the company is expected to gain impressive market share in future. However, NQ Mobile is stuck in to a problem. Instead of the authorization of share buyback plan, the company can execute it only until the FL Mobile deal is closed.

The way ahead

Despite the weak financials, NQ Mobile is on track with its objective of long term revenue gains. The company is focusing on many initiatives that might drive its long term earnings. However, this estimate of the company is in infancy. Looking at the present scenario, NQ Mobile is struggling and should undertake some promising steps that can up lift its financial performance in the near-term.

Moving on, NQ Mobile is counting some good efforts investment that it made in the past. It is counting on its platform strategy under which it bolstered its performance with the acquisition of Nation Sky and FL Mobile. With these efforts, the company is expecting them to exhibit good synergies in future. in addition, NQ Mobile is also scaling its enterprise and gaming business, also adding critical component to its platform and traffic strategy of advertising. It also has many productivity applications running in the market such as music, image search, NQ Live and Showself which are popular in the market and are expected to further drive its sales and revenue in the upcoming quarters.

Conclusion

The stock doesn’t have a trailing as it is still trying to overcome the loss that it incurring, while the forward P/E of just 2.46 also indicates that the company’s earnings are growing very slowly as the transitional efforts seems to in infancy. However, in the long term the stock can be a good long term holding as its earnings are growing with a CAGR of 40.00% which is more than the industry average of 20.38%. With these valuation levels it is clear that the company however looks weak in the near term but in the next five years it is expected to be a good turnaround story. I would like to suggest the long term investors to surely include NQ Mobile in their portfolio.