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

LinnCo

(

LNCO

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

  • LNCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.6 million.
  • LNCO has traded 83,711 shares today.
  • LNCO is down 3.1% today.
  • LNCO was up 5.5% yesterday.

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More details on LNCO:

LinnCo, LLC, through its limited liability company interests in Linn Energy, LLC, focuses on the acquisition and development of oil and natural gas properties in the United States. The company was founded in 2012 and is headquartered in Houston, Texas. The stock currently has a dividend yield of 15.2%. Currently there are 4 analysts that rate LinnCo a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for LinnCo has been 1.4 million shares per day over the past 30 days. LinnCo has a market cap of $1.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.65 and a short float of 8.4% with 6.36 days to cover. Shares are down 16.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LinnCo as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 69.2% when compared to the same quarter one year ago, falling from -$19.48 million to -$32.98 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LINNCO LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $40.52 million or 56.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, LINNCO LLC has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 70.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 73.33% 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.
  • Along with the very weak revenue results, LNCO underperformed when compared to the industry average of 38.9%. Since the same quarter one year prior, revenues plummeted by 65.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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