Heavy Early Morning Activity On SolarCity (SCTY) - TheStreet

Trade-Ideas LLC identified

SolarCity

(

SCTY

) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified SolarCity as such a stock due to the following factors:

  • SCTY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $97.5 million.
  • SCTY traded 343,320 shares today in the pre-market hours as of 9:08 AM, representing 10.7% of its average daily volume.

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More details on SCTY:

SolarCity Corporation designs, manufactures, installs, maintains, monitors, leases, and sells solar energy systems to residential, commercial, government, and other customers in the United States. Currently there are 11 analysts that rate SolarCity a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for SolarCity has been 2.9 million shares per day over the past 30 days. SolarCity has a market cap of $3.7 billion and is part of the technology sector and electronics industry. The stock has a beta of 3.09 and a short float of 44.1% with 8.13 days to cover. Shares are down 28.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SolarCity as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SCTY has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$140.63 million or 285.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SCTY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.86%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 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 Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • SOLARCITY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SOLARCITY CORP continued to lose money by earning -$0.63 versus -$0.81 in the prior year. For the next year, the market is expecting a contraction of 1058.7% in earnings (-$7.30 versus -$0.63).

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