Trade-Ideas: SunPower (SPWR) Is Today's "Dead Cat Bounce" Stock

Trade-Ideas LLC identified SunPower (SPWR) as a "dead cat bounce" (down big yesterday but up big today) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

SunPower

(

SPWR

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

  • SPWR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.7 million.
  • SPWR has traded 1.1 million shares today.
  • SPWR is up 3.1% today.
  • SPWR was down 6.4% yesterday.

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More details on SPWR:

SunPower Corporation designs, manufactures, and delivers solar systems to residential, commercial, and power plant customers worldwide. The company provides solar power components, including panels and other system components. Currently there are 11 analysts that rate SunPower a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for SunPower has been 2.1 million shares per day over the past 30 days. SunPower has a market cap of $2.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.68 and a short float of 35.4% with 7.04 days to cover. Shares are down 51.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SunPower as a

hold

. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • SPWR, with its decline in revenue, underperformed when compared the industry average of 5.8%. Since the same quarter one year prior, revenues fell by 12.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SUNPOWER CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SUNPOWER CORP swung to a loss, reporting -$1.37 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus -$1.37).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 785.71% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The gross profit margin for SUNPOWER CORP is rather low; currently it is at 24.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -22.19% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$369.90 million or 226.16% 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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