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

Knowles Corporation

(

KN

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Knowles Corporation as such a stock due to the following factors:

  • KN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.8 million.
  • KN has traded 90,008 shares today.
  • KN is down 3.2% today.
  • KN was up 6.2% yesterday.

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More details on KN:

Knowles Corporation designs, manufactures, and sells products and components to the mobile communications, consumer electronics, medical technology, telecommunications infrastructure, military, aerospace, and industrial markets worldwide. Currently there are 2 analysts that rate Knowles Corporation a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Knowles Corporation has been 1.4 million shares per day over the past 30 days. Knowles has a market cap of $1.5 billion and is part of the technology sector and telecommunications industry. Shares are down 22.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Knowles Corporation as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 306.7% when compared to the same quarter one year ago, falling from $7.64 million to -$15.80 million.
  • Net operating cash flow has significantly decreased to $6.80 million or 84.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 311.11% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • KNOWLES 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, KNOWLES CORP swung to a loss, reporting -$1.02 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus -$1.02).
  • 35.92% is the gross profit margin for KNOWLES CORP which we consider to be strong. Regardless of KN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KN's net profit margin of -6.62% significantly underperformed when compared to the industry average.

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