Trade-Ideas LLC identified

21Vianet Group

(

VNET

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified 21Vianet Group as such a stock due to the following factors:

  • VNET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.0 million.
  • VNET has traded 1.3 million shares today.
  • VNET is down 3.4% today.
  • VNET was up 6.8% yesterday.

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More details on VNET:

21Vianet Group, Inc. provides carrier-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small-to mid-sized enterprises in the People's Republic of China. Currently there are no analysts that rate 21Vianet Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for 21Vianet Group has been 1.6 million shares per day over the past 30 days. 21Vianet Group has a market cap of $858.8 million and is part of the technology sector and computer software & services industry. Shares are down 50.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates 21Vianet Group 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 Internet Software & Services industry. The net income has significantly decreased by 41.9% when compared to the same quarter one year ago, falling from -$15.60 million to -$22.15 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, 21VIANET GROUP INC'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 -$2.87 million or 115.89% 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 VNET's shares over the past 12 months, there is not much good news to report: the stock is down 45.17%, 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.
  • 21VIANET GROUP INC's earnings per share declined by 18.2% 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, 21VIANET GROUP INC continued to lose money by earning -$0.80 versus -$0.85 in the prior year. For the next year, the market is expecting a contraction of 116.3% in earnings (-$1.73 versus -$0.80).

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