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Trade-Ideas: Sohu.com (SOHU) Is Today's "Dead Cat Bounce" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sohu.com ( SOHU) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sohu.com as such a stock due to the following factors:

  • SOHU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $204.2 million.
  • SOHU has traded 3.2 million shares today.
  • SOHU is up 3.1% today.
  • SOHU was down 5.9% yesterday.

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More details on SOHU:

Sohu.com Inc. provides online media, search, gaming, community, and mobile services in the People's Republic of China. SOHU has a PE ratio of 28.5. Currently there are 2 analysts that rate Sohu.com a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Sohu.com has been 1.2 million shares per day over the past 30 days. Sohu.com has a market cap of $2.6 billion and is part of the technology sector and internet industry. The stock has a beta of 2.32 and a short float of 7.1% with 0.57 days to cover. Shares are up 60.8% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sohu.com as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • SOHU's revenue growth has slightly outpaced the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 32.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although SOHU's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, SOHU has a quick ratio of 1.92, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for SOHU.COM INC is currently very high, coming in at 79.74%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SOHU's net profit margin of 6.38% significantly trails the industry average.
  • SOHU.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOHU.COM INC reported lower earnings of $2.04 versus $3.93 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $2.04).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, SOHU.COM INC's return on equity is below that of both the industry average and the S&P 500.

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