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 $20.3 million.
- FU has traded 2.8 million shares today.
- FU is up 3.1% today.
- FU was down 5.7% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in FU with the Ticky from Trade-Ideas. See the FREE profile for FU NOW at Trade-IdeasMore 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 0.74 and a short float of 5.1% with 0.25 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 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 impressive record of earnings per share growth. 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:
- FU's very impressive revenue growth greatly exceeded the industry average of 0.8%. Since the same quarter one year prior, revenues leaped by 2872.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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.
- 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. Despite the mixed results of the gross profit margin, FU's net profit margin of 22.15% significantly outperformed against the industry.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market on the basis of return on equity, FAB UNIVERSAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Powered by its strong earnings growth of 566.66% and other important driving factors, this stock has surged by 76.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- You can view the full FAB Universal Ratings Report.
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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