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

Scientific Games

(

SGMS

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

  • SGMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.5 million.
  • SGMS has traded 697,343 shares today.
  • SGMS is up 4.5% today.
  • SGMS was down 7.7% yesterday.

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More details on SGMS:

Scientific Games Corporation develops technology-based products and services, and associated content for the gaming and lottery industries worldwide. The company operates through three segments: Gaming, Lottery, and Interactive. Currently there are 4 analysts that rate Scientific Games a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Scientific Games has been 1.2 million shares per day over the past 30 days. Scientific Games has a market cap of $1.3 billion and is part of the services sector and leisure industry. The stock has a beta of 2.41 and a short float of 33.1% with 19.94 days to cover. Shares are up 12.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Scientific Games as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • SGMS's very impressive revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues leaped by 69.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, SGMS's share price has jumped by 73.22%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for SCIENTIFIC GAMES CORP is rather high; currently it is at 62.91%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -13.11% is in-line with the industry average.
  • SCIENTIFIC GAMES 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. 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, SCIENTIFIC GAMES CORP reported poor results of -$2.76 versus -$0.31 in the prior year. For the next year, the market is expecting a contraction of 33.7% in earnings (-$3.69 versus -$2.76).
  • 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 92.0% when compared to the same quarter one year ago, falling from -$45.00 million to -$86.40 million.

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