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Today's Dead Cat Bounce Stock Is Liquidity Service (LQDT)

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

  • LQDT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.4 million.
  • LQDT has traded 566,899 shares today.
  • LQDT is up 3.3% today.
  • LQDT was down 18.7% yesterday.

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More details on LQDT:

Liquidity Services, Inc. operates various online auction marketplaces for surplus, salvage, and scrap assets in the United States. LQDT has a PE ratio of 23.4. Currently there are 8 analysts that rate Liquidity Service a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Liquidity Service has been 432,000 shares per day over the past 30 days. Liquidity Service has a market cap of $825.4 million and is part of the services sector and retail industry. The stock has a beta of -1.44 and a short float of 36.8% with 12.94 days to cover. Shares are down 48.3% 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 Liquidity Service as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
  • LQDT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 812.96% to $6.41 million when compared to the same quarter last year. In addition, LIQUIDITY SERVICES INC has also vastly surpassed the industry average cash flow growth rate of 23.77%.
  • LIQUIDITY SERVICES INC's earnings per share declined by 22.2% 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, LIQUIDITY SERVICES INC increased its bottom line by earning $1.47 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.47).

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