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

FXCM

(

FXCM

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

  • FXCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.6 million.
  • FXCM has traded 191,408 shares today.
  • FXCM is up 4.9% today.
  • FXCM was down 6.8% yesterday.

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More details on FXCM:

FXCM Inc., through its subsidiaries, provides online foreign exchange (FX) trading and related services to retail and institutional customers worldwide. It operates in two segments, Retail Trading and Institutional Trading. The stock currently has a dividend yield of 9.8%. FXCM has a PE ratio of 6.3. Currently there are no analysts that rate FXCM a buy, 3 analysts rate it a sell, and 2 rate it a hold.

The average volume for FXCM has been 11.8 million shares per day over the past 30 days. FXCM has a market cap of $124.2 million and is part of the financial sector and financial services industry. The stock has a beta of 2.05 and a short float of 32.3% with 1.66 days to cover. Shares are down 86.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates FXCM as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, poor profit margins and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • FXCM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 86.28%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FXCM is still more expensive than most of the other companies in its industry.
  • The gross profit margin for FXCM INC is currently lower than what is desirable, coming in at 29.19%. Regardless of FXCM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.32% trails the industry average.
  • FXCM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FXCM INC reported lower earnings of $0.37 versus $0.48 in the prior year. For the next year, the market is expecting a contraction of 64.3% in earnings ($0.13 versus $0.37).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, FXCM INC's return on equity is below that of both the industry average and the S&P 500.

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