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

Companhia Brasileira De Distribuicao

(

CBD

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

  • CBD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.5 million.
  • CBD has traded 247,836 shares today.
  • CBD is down 3% today.
  • CBD was up 7.6% yesterday.

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More details on CBD:

Companhia Brasileira de Distribuicao engages in the retail of food, clothing, home appliances, electronics, and other products through its chain of hypermarkets, supermarkets, specialized stores, and department stores primarily in Brazil. The stock currently has a dividend yield of 0.8%. CBD has a PE ratio of 12. Currently there is 1 analyst that rates Companhia Brasileira De Distribuicao a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Companhia Brasileira De Distribuicao has been 602,300 shares per day over the past 30 days. Companhia Brasileira De Distribuicao has a market cap of $5.8 billion and is part of the services sector and retail industry. Shares are down 35.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Companhia Brasileira De Distribuicao as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that CBD's debt-to-equity ratio is low, the quick ratio, which is currently 0.51, displays a potential problem in covering short-term cash needs.
  • CBD, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues fell by 18.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CIA BRASILEIRA DE DISTRIB is rather low; currently it is at 24.16%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.11% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$1,456.84 million or 81.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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