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

NutriSystem

(

NTRI

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

  • NTRI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.1 million.
  • NTRI has traded 413,542 shares today.
  • NTRI is down 3.1% today.
  • NTRI was up 21.9% yesterday.

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More details on NTRI:

Nutrisystem, Inc., together with its subsidiaries, provides weight loss programs for women, men, and seniors in the United States. The company offers Nutrisystem program that consists of approximately 150 portion-controlled items, which serve as the foundation of a low glycemic index diet. The stock currently has a dividend yield of 2.8%. NTRI has a PE ratio of 34. Currently there are 3 analysts that rate NutriSystem a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for NutriSystem has been 381,000 shares per day over the past 30 days. NutriSystem has a market cap of $729.2 million and is part of the services sector and diversified services industry. The stock has a beta of 1.14 and a short float of 11.4% with 5.99 days to cover. Shares are up 57.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates NutriSystem as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • NTRI's revenue growth trails the industry average of 33.4%. Since the same quarter one year prior, revenues rose by 17.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NTRI 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 1.08, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, NUTRISYSTEM INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for NUTRISYSTEM INC is rather high; currently it is at 51.97%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.27% is above that of the industry average.

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