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Today's Dead Cat Bounce Stock Is ITT Educational Services (ESI)

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

  • ESI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.7 million.
  • ESI has traded 978,678 shares today.
  • ESI is up 3.1% today.
  • ESI was down 8% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ESI with the Ticky from Trade-Ideas. See the FREE profile for ESI NOW at Trade-Ideas

More details on ESI:

ITT Educational Services, Inc. provides postsecondary degree programs in the United States. ESI has a PE ratio of 8.1. Currently there are 3 analysts that rate ITT Educational Services a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for ITT Educational Services has been 528,100 shares per day over the past 30 days. ITT Educational Services has a market cap of $441.0 million and is part of the services sector and diversified services industry. Shares are down 43.8% 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 ITT Educational Services as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • ESI's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
  • The gross profit margin for ITT EDUCATIONAL SERVICES INC is rather high; currently it is at 56.38%. Regardless of ESI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ESI's net profit margin of -4.39% significantly underperformed when compared to the industry average.
  • 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 Diversified Consumer Services industry. The net income has decreased by 21.9% when compared to the same quarter one year ago, dropping from -$9.47 million to -$11.55 million.
  • Net operating cash flow has decreased to $60.96 million or 29.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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