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

Youku Tudou

(

YOKU

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Youku Tudou as such a stock due to the following factors:

  • YOKU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.6 million.
  • YOKU has traded 70,416 shares today.
  • YOKU is down 3% today.
  • YOKU was up 5% yesterday.

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More details on YOKU:

Youku Tudou Inc. operates as an Internet television company in the People's Republic of China. Its Internet television platform enables users to search, view, and share video content across various devices. Currently there are 3 analysts that rate Youku Tudou a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Youku Tudou has been 4.3 million shares per day over the past 30 days. Youku Tudou has a market cap of $3.8 billion and is part of the technology sector and internet industry. Shares are up 14.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Youku Tudou as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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 disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 47.5%. 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.
  • Although YOKU's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.78, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 194.8% when compared to the same quarter one year ago, falling from -$28.32 million to -$83.47 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, YOUKU TUDOU INC's return on equity significantly trails that of both the industry average and the S&P 500.

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