Trade-Ideas LLC identified

NOW

(

DNOW

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

  • DNOW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.8 million.
  • DNOW has traded 52,348 shares today.
  • DNOW is up 3.6% today.
  • DNOW was down 5.2% yesterday.

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More details on DNOW:

NOW Inc. distributes energy and industrial products in the United States, Canada, and internationally. Currently there are no analysts that rate NOW a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for NOW has been 1.5 million shares per day over the past 30 days. NOW has a market cap of $1.8 billion and is part of the basic materials sector and energy industry. Shares are up 6.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates NOW as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 Trading Companies & Distributors industry. The net income has significantly decreased by 1656.3% when compared to the same quarter one year ago, falling from $16.00 million to -$249.00 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 Trading Companies & Distributors industry and the overall market, NOW INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NOW INC is rather low; currently it is at 18.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -38.66% is significantly below that of the industry average.
  • The share price of NOW INC has not done very well: it is down 18.12% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when 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.
  • NOW 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NOW INC swung to a loss, reporting -$4.69 versus $1.07 in the prior year. This year, the market expects an improvement in earnings (-$1.19 versus -$4.69).

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