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

  • MM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.0 million.
  • MM has traded 878,061 shares today.
  • MM is up 3.3% today.
  • MM was down 5.1% yesterday.

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More details on MM:

Millennial Media, Inc. provides mobile advertising solutions for advertisers and developers in the United States and internationally. Currently there is 1 analyst that rates Millennial Media a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Millennial Media has been 1.8 million shares per day over the past 30 days. Millennial Media has a market cap of $619.9 million and is part of the services sector and media industry. The stock has a beta of 0.47 and a short float of 24.3% with 4.46 days to cover. Shares are down 39.2% year to date as of the close of trading on Monday.

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 Millennial Media as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • 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 Internet Software & Services industry. The net income has significantly decreased by 36.5% when compared to the same quarter one year ago, falling from -$2.24 million to -$3.05 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MILLENNIAL MEDIA INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MILLENNIAL MEDIA INC reported poor results of -$0.07 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$0.07).
  • Compared to other companies in the Internet Software & Services industry and the overall market, MILLENNIAL MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 44.28% is the gross profit margin for MILLENNIAL MEDIA INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.35% is in-line with the industry average.

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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