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

  • FU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.6 million.
  • FU has traded 520,547 shares today.
  • FU is up 3.3% today.
  • FU was down 9.8% yesterday.

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More details on FU:

FAB Universal Corp. engages in the distribution of digital entertainment products and services worldwide. The company operates in three segments: Wholesale, Retail, and Kiosk/Licensing. FU has a PE ratio of 37.1. Currently there is 1 analyst that rates FAB Universal a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for FAB Universal has been 466,700 shares per day over the past 30 days. FAB Universal has a market cap of $192.9 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.68 and a short float of 1.3% with 0.05 days to cover. Shares are up 187.9% year to date as of the close of trading on Friday.

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 FAB Universal as a sell. The area that we feel has been the company's primary weakness has been its generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • Compared to where it was trading one year ago, FU is down 3.45% to its most recent closing price of 4.20. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.
  • The gross profit margin for FAB UNIVERSAL CORP is rather high; currently it is at 51.05%. Regardless of FU's high profit margin, it has managed to decrease from the same period last year.
  • FU's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • FAB UNIVERSAL CORP 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. During the past fiscal year, FAB UNIVERSAL CORP continued to lose money by earning -$0.50 versus -$1.32 in the prior year.
  • The net income increased by 1830.8% when compared to the same quarter one year prior, rising from -$0.33 million to $5.73 million.

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

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