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

GrubHub

(

GRUB

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

  • GRUB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $80.5 million.
  • GRUB has traded 190,575 shares today.
  • GRUB is up 17.1% today.
  • GRUB was down 8.2% yesterday.

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More details on GRUB:

GrubHub Inc., together with its subsidiaries, provides an online and mobile platform for restaurant pick-up and delivery orders in the United States. The company connects approximately 30,000 local restaurants with diners in approximately 800 cities. GRUB has a PE ratio of 93. Currently there are 14 analysts that rate GrubHub a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for GrubHub has been 2.1 million shares per day over the past 30 days. GrubHub has a market cap of $2.8 billion and is part of the technology sector and internet industry. Shares are down 6.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates GrubHub as a

sell

. The area that we feel has been the company's primary weakness has been its disappointing return on equity.

Highlights from the ratings report include:

  • When compared to other companies in the Internet Software & Services industry and the overall market, GRUBHUB INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $30.42 million or 9.29% when compared to the same quarter last year. Despite an increase in cash flow, GRUBHUB INC's average is still marginally south of the industry average growth rate of 17.38%.
  • The gross profit margin for GRUBHUB INC is currently very high, coming in at 74.28%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GRUB's net profit margin of 11.97% significantly trails the industry average.
  • GRUB 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 this, the company maintains a quick ratio of 2.55, which clearly demonstrates the ability to cover short-term cash needs.
  • After a year of stock price fluctuations, the net result is that GRUB's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar.

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