Trade-Ideas LLC identified

SolarCity

(

SCTY

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

  • SCTY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $129.2 million.
  • SCTY has traded 348,765 shares today.
  • SCTY is up 3.1% today.
  • SCTY was down 6.2% yesterday.

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More details on SCTY:

SolarCity Corporation designs, manufactures, installs, monitors, maintains, leases, and sells solar energy systems to government, residential, and commercial customers in the United States. Currently there are 9 analysts that rate SolarCity a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for SolarCity has been 5.9 million shares per day over the past 30 days. SolarCity has a market cap of $2.2 billion and is part of the utilities sector and utilities industry. The stock has a beta of 1.92 and a short float of 40.8% with 4.97 days to cover. Shares are down 56.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SolarCity as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 4.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for SOLARCITY CORP is currently extremely low, coming in at 10.95%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -20.38% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$193.12 million or 12.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Looking at the price performance of SCTY's shares over the past 12 months, there is not much good news to report: the stock is down 61.31%, 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.
  • SOLARCITY CORP's earnings per share declined by 13.6% 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, SOLARCITY CORP continued to lose money by earning -$0.61 versus -$0.63 in the prior year. For the next year, the market is expecting a contraction of 1536.9% in earnings (-$9.99 versus -$0.61).

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