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

LifeLock

(

LOCK

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

  • LOCK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.7 million.
  • LOCK has traded 182,765 shares today.
  • LOCK is down 13.1% today.
  • LOCK was up 11.2% yesterday.

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More details on LOCK:

LifeLock, Inc. provides identity theft protection services for consumers; and consumer risk management services for enterprises in the United States. Currently there are 5 analysts that rate LifeLock a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for LifeLock has been 2.7 million shares per day over the past 30 days. LifeLock has a market cap of $730.4 million and is part of the technology sector and computer software & services industry. The stock has a beta of -0.43 and a short float of 16.1% with 1.12 days to cover. Shares are down 58.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LifeLock as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 24.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • LOCK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for LIFELOCK INC is currently very high, coming in at 75.94%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.81% is in-line with the industry average.
  • 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 Diversified Consumer Services industry. The net income has significantly decreased by 113.2% when compared to the same quarter one year ago, falling from -$4.30 million to -$9.16 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, LIFELOCK INC's return on equity significantly trails that of both the industry average and the S&P 500.

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