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Trade-Ideas LLC identified

LSB Industries

(

LXU

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

  • LXU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.7 million.
  • LXU has traded 279,758 shares today.
  • LXU is up 3.3% today.
  • LXU was down 19.2% yesterday.

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More details on LXU:

LSB Industries, Inc., through its subsidiaries, manufactures and sells chemical products, water source and geothermal heat pumps, and air handling products. The company operates in two segments, Chemical Business and Climate Control Business. Currently there are 2 analysts that rate LSB Industries a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Recommends

The average volume for LSB Industries has been 455,400 shares per day over the past 30 days. LSB has a market cap of $207.0 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.61 and a short float of 3.7% with 0.44 days to cover. Shares are down 76.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LSB Industries as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • LSB INDUSTRIES INC 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, LSB INDUSTRIES INC reported lower earnings of $0.82 versus $2.31 in the prior year. For the next year, the market is expecting a contraction of 85.4% in earnings ($0.12 versus $0.82).
  • 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 Chemicals industry. The net income has significantly decreased by 793.9% when compared to the same quarter one year ago, falling from -$3.78 million to -$33.76 million.
  • The debt-to-equity ratio of 1.21 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, LXU maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
  • 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 Chemicals industry and the overall market, LSB INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 74.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 770.58% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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