Today's Dead Cat Bounce Stock Is Gerdau (GGB)
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.
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Gerdau as such a stock due to the following factors:
- GGB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.1 million.
- GGB has traded 796,947 shares today.
- GGB is up 3.3% today.
- GGB was down 11% yesterday.
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More details on GGB:
Gerdau S.A. produces and commercializes steel products worldwide. The stock currently has a dividend yield of 1.3%. GGB has a PE ratio of 2.8. Currently there are 3 analysts that rate Gerdau a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Gerdau has been 6.4 million shares per day over the past 30 days. Gerdau has a market cap of $5.9 billion and is part of the basic materials sector and metals & mining industry. Shares are down 13.8% year-to-date as of the close of trading on Friday.
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Analysis:
rates Gerdau as a
. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, notable return on equity and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, GERDAU SA has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- GGB, with its decline in revenue, slightly underperformed the industry average of 18.7%. Since the same quarter one year prior, revenues fell by 27.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $215.99 million or 73.77% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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 Metals & Mining industry. The net income has significantly decreased by 74.2% when compared to the same quarter one year ago, falling from $266.83 million to $68.73 million.
- You can view the full Gerdau Ratings Report.
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