Trade-Ideas: Select Comfort (SCSS) Is Today's "Dead Cat Bounce" Stock
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 Select Comfort as such a stock due to the following factors:
- SCSS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.1 million.
- SCSS has traded 274,573 shares today.
- SCSS is up 3.1% today.
- SCSS was down 6.3% yesterday.
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More details on SCSS:
Select Comfort Corporation, together with its subsidiaries, provides sleep solutions and services in the United States. SCSS has a PE ratio of 34. Currently there are 3 analysts that rate Select Comfort a buy, no analysts rate it a sell, and 4 rate it a hold.
The average volume for Select Comfort has been 758,700 shares per day over the past 30 days. Select Comfort has a market cap of $1.1 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.56 and a short float of 13.7% with 5.40 days to cover. Shares are up 2.8% year-to-date as of the close of trading on Thursday.
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Analysis:
rates Select Comfort as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Highlights from the ratings report include:
- SCSS's revenue growth has slightly outpaced the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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.
- The gross profit margin for SELECT COMFORT CORP is rather high; currently it is at 66.95%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.51% trails the industry average.
- SCSS's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.13 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has significantly decreased to -$16.86 million or 342.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of SELECT COMFORT CORP has not done very well: it is down 17.26% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full Select Comfort Ratings Report.
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