Trade-Ideas LLC identified

Jumei International

(

JMEI

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

  • JMEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.3 million.
  • JMEI has traded 1.5 million shares today.
  • JMEI is down 3% today.
  • JMEI was up 7.3% yesterday.

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More details on JMEI:

Jumei International Holding Limited operates as an online retailer of beauty products in the People's Republic of China. The company offers beauty products, such as cosmetics, skin care, cosmetic applicators, fragrance, and body care products; and beauty products for men, and baby and children. JMEI has a PE ratio of 17. Currently there are 2 analysts that rate Jumei International a buy, no analysts rate it a sell, and 3 rate it a hold.

TheStreet Recommends

The average volume for Jumei International has been 2.0 million shares per day over the past 30 days. Jumei International has a market cap of $1.2 billion and is part of the services sector and specialty retail industry. Shares are down 37.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Jumei International as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • JUMEI INTL HOLDING LTD -ADR's earnings per share declined by 15.4% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 4.7% in earnings ($0.43 versus $0.45).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income has decreased by 10.6% when compared to the same quarter one year ago, dropping from $19.18 million to $17.14 million.
  • The gross profit margin for JUMEI INTL HOLDING LTD -ADR is currently lower than what is desirable, coming in at 29.97%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 5.56% is above that of the industry average.
  • Looking at the price performance of JMEI's shares over the past 12 months, there is not much good news to report: the stock is down 60.57%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • When compared to other companies in the Internet & Catalog Retail industry and the overall market, JUMEI INTL HOLDING LTD -ADR's return on equity is below that of both the industry average and the S&P 500.

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