Trade-Ideas LLC identified

YY

(

YY

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

  • YY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $71.0 million.
  • YY has traded 103,948 shares today.
  • YY is down 3.1% today.
  • YY was up 8.3% yesterday.

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More details on YY:

YY Inc., through its subsidiaries, operates an online social platform in the People's Republic of China. YY has a PE ratio of 16. Currently there are 4 analysts that rate YY a buy, no analysts rate it a sell, and 2 rate it a hold.

TheStreet Recommends

The average volume for YY has been 1.4 million shares per day over the past 30 days. YY has a market cap of $2.9 billion and is part of the technology sector and internet industry. Shares are down 14.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates YY as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:

  • YY's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 73.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • YY INC -ADR has improved earnings per share by 26.5% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YY INC -ADR increased its bottom line by earning $2.79 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($3.27 versus $2.79).
  • 41.51% is the gross profit margin for YY INC -ADR which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.73% trails the industry average.
  • YY'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 31.13%, 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. 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.
  • The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.97, which shows the ability to cover short-term cash needs.

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