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Trade-Ideas: Kandi Technologies Group (KNDI) Is Today's "Perilous Reversal" 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 Kandi Technologies Group ( KNDI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Kandi Technologies Group as such a stock due to the following factors:

  • KNDI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.6 million.
  • KNDI has traded 2.3 million shares today.
  • KNDI is down 3.1% today.
  • KNDI was up 5.2% yesterday.

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More details on KNDI:

Kandi Technologies Group, Inc., through its subsidiaries, engages in the design, development, manufacture, and commercialization of various vehicles. KNDI has a PE ratio of 64.2.

The average volume for Kandi Technologies Group has been 1.7 million shares per day over the past 30 days. Kandi Technologies Group has a market cap of $308.3 million and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.65 and a short float of 17.6% with 0.82 days to cover. Shares are up 109% 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 Kandi Technologies Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 40.64% is the gross profit margin for KANDI TECHNOLOGIES GROUP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -8.58% is in-line with the industry average.
  • Compared to its closing price of one year ago, KNDI's share price has jumped by 89.01%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 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 Automobiles industry. The net income has significantly decreased by 215.3% when compared to the same quarter one year ago, falling from $0.91 million to -$1.04 million.
  • The debt-to-equity ratio of 1.42 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.

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