Trade-Ideas LLC identified

Straight Path Communications

(

STRP

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

  • STRP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.1 million.
  • STRP has traded 67,065 shares today.
  • STRP is down 3.4% today.
  • STRP was up 28.9% yesterday.

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More details on STRP:

Straight Path Communications Inc., through its subsidiaries, holds, leases, and markets fixed wireless spectrum licenses in the United States. The company holds 828 licenses of 39 gigahertz band; and 133 licenses in the local multipoint distribution service band.

The average volume for Straight Path Communications has been 681,100 shares per day over the past 30 days. Straight Path has a market cap of $140.0 million and is part of the technology sector and telecommunications industry. The stock has a beta of 0.50 and a short float of 32.4% with 2.23 days to cover. Shares are down 34.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Straight Path Communications 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 205.1% when compared to the same quarter one year ago, falling from $3.04 million to -$3.19 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 Telecommunication Services industry and the overall market, STRAIGHT PATH COMMUNICATIONS'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 -$0.38 million or 106.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 212.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • STRAIGHT PATH COMMUNICATIONS 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 reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, STRAIGHT PATH COMMUNICATIONS swung to a loss, reporting -$0.17 versus $0.15 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.17).

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