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

Precision Castparts

(

PCP

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

  • PCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $334.2 million.
  • PCP has traded 207,171 shares today.
  • PCP is down 3.2% today.
  • PCP was up 7.5% yesterday.

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More details on PCP:

Precision Castparts Corp. manufactures and sells metal components and products to the aerospace, power, and general industrial and other markets worldwide. The company operates through three segments: Investment Cast Products, Forged Products, and Airframe Products. The stock currently has a dividend yield of 0.1%. PCP has a PE ratio of 17. Currently there are 8 analysts that rate Precision Castparts a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Precision Castparts has been 1.3 million shares per day over the past 30 days. Precision Castparts has a market cap of $25.8 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.20 and a short float of 2.7% with 1.88 days to cover. Shares are down 16.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Precision Castparts as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.79 is somewhat weak and could be cause for future problems.
  • 35.14% is the gross profit margin for PRECISION CASTPARTS CORP which we consider to be strong. Regardless of PCP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.39% trails the industry average.
  • Net operating cash flow has remained constant at $460.00 million with no significant change when compared to the same quarter last year. Despite stable cash flow, PRECISION CASTPARTS CORP's cash flow growth rate is still lower than the industry average growth rate of 30.90%.
  • PRECISION CASTPARTS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PRECISION CASTPARTS CORP reported lower earnings of $10.71 versus $11.95 in the prior year. This year, the market expects an improvement in earnings ($12.80 versus $10.71).
  • PCP, with its decline in revenue, slightly underperformed the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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