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Trade-Ideas: 21Vianet Group (VNET) 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 21Vianet Group ( VNET) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified 21Vianet Group as such a stock due to the following factors:

  • VNET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.5 million.
  • VNET has traded 19,486 shares today.
  • VNET is up 4.3% today.
  • VNET was down 8.8% yesterday.

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More details on VNET:

21Vianet Group, Inc. provides carrier-neutral Internet data center services in the People's Republic of China. VNET has a PE ratio of 153.3. Currently there are 5 analysts that rate 21Vianet Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for 21Vianet Group has been 547,300 shares per day over the past 30 days. 21Vianet Group has a market cap of $1.1 billion and is part of the technology sector and computer software & services industry. Shares are up 91.5% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates 21Vianet Group as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • Compared to its price level of one year ago, VNET is up 81.63% to its most recent closing price of 18.40. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 31.4%. 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.
  • 21VIANET GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, 21VIANET GROUP INC increased its bottom line by earning $0.15 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.15).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, 21VIANET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 215.3% when compared to the same quarter one year ago, falling from $1.89 million to -$2.17 million.

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