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 or Stephanie Link.

Trade-Ideas LLC identified

Rally Software Development

(

RALY

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

  • RALY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.6 million.
  • RALY has traded 285,718 shares today.
  • RALY is down 3.2% today.
  • RALY was up 13% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in RALY with the Ticky from Trade-Ideas. See the FREE profile for RALY NOW at Trade-Ideas

More details on RALY:

Rally Software Development Corp. provides cloud based solutions for managing Agile software development activities worldwide. Currently there are 2 analysts that rate Rally Software Development a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Rally Software Development has been 554,500 shares per day over the past 30 days. Rally Software Development has a market cap of $240.9 million and is part of the technology sector and computer software & services industry. Shares are down 43.7% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rally Software Development as a

sell

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

Highlights from the ratings report include:

  • RALLY SOFTWARE DEV CORP's earnings per share declined by 36.0% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 58.3% in earnings (-$1.33 versus -$0.84).
  • 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 Software industry. The net income has significantly decreased by 46.5% when compared to the same quarter one year ago, falling from -$5.79 million to -$8.48 million.
  • Net operating cash flow has significantly decreased to -$2.76 million or 303.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for RALLY SOFTWARE DEV CORP is currently very high, coming in at 77.13%. Regardless of RALY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RALY's net profit margin of -43.64% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Software industry and the overall market, RALLY SOFTWARE DEV CORP's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null