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

Now

(

DNOW

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

  • DNOW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.1 million.
  • DNOW has traded 61,552 shares today.
  • DNOW is down 3.8% today.
  • DNOW was up 5.1% yesterday.

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More details on DNOW:

NOW Inc. distributes energy and industrial products in the United States, Canada, and internationally. DNOW has a PE ratio of 32. Currently there are no analysts that rate Now a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Now has been 877,400 shares per day over the past 30 days. Now has a market cap of $2.0 billion and is part of the basic materials sector and energy industry. Shares are down 27.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Now as a

sell

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

Highlights from the ratings report include:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.09%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 123.68% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • NOW INC 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. For the next year, the market is expecting a contraction of 122.9% in earnings (-$0.25 versus $1.07).
  • 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 Trading Companies & Distributors industry. The net income has significantly decreased by 124.4% when compared to the same quarter one year ago, falling from $41.00 million to -$10.00 million.
  • The gross profit margin for NOW INC is rather low; currently it is at 18.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.15% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$13.00 million or 533.33% 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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