Trade-Ideas LLC identified

MBIA

(

MBI

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

  • MBI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.3 million.
  • MBI has traded 1.1 million shares today.
  • MBI is down 3.1% today.
  • MBI was up 13.6% yesterday.

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More details on MBI:

MBIA Inc. provides financial guarantee insurance services to public finance markets in the United States and internationally. The company operates through U.S. Public Finance Insurance, and International and Structured Finance Insurance segments. MBI has a PE ratio of 4. Currently there are no analysts that rate MBIA a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for MBIA has been 5.6 million shares per day over the past 30 days. MBIA has a market cap of $1.1 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.98 and a short float of 18.1% with 5.88 days to cover. Shares are down 19.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates MBIA as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Insurance industry. The net income has significantly decreased by 46.7% when compared to the same quarter one year ago, falling from $120.00 million to $64.00 million.
  • The debt-to-equity ratio is very high at 2.29 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Insurance industry and the overall market, MBIA INC's return on equity is below that of both the industry average and the S&P 500.
  • Looking at the price performance of MBI's shares over the past 12 months, there is not much good news to report: the stock is down 35.92%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • MBIA INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MBIA INC increased its bottom line by earning $2.67 versus $1.10 in the prior year. For the next year, the market is expecting a contraction of 80.5% in earnings ($0.52 versus $2.67).

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