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

Viggle

(

VGGL

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

  • VGGL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.0 million.
  • VGGL has traded 1.9 million shares today.
  • VGGL is down 5.1% today.
  • VGGL was up 58.6% yesterday.

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More details on VGGL:

TheStreet Recommends

Viggle Inc. operates as a mobile and Web-based entertainment marketing platform for media companies, brands, and consumers in the United States. VGGL has a PE ratio of 0.2. Currently there is 1 analyst that rates Viggle a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Viggle has been 1.0 million shares per day over the past 30 days. Viggle has a market cap of $39.2 million and is part of the services sector and leisure industry. The stock has a beta of -0.25 and a short float of 18.4% with 0.26 days to cover. Shares are down 10.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Viggle as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 Internet Software & Services industry. The net income has significantly decreased by 65.8% when compared to the same quarter one year ago, falling from -$13.41 million to -$22.23 million.
  • The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.16, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has declined marginally to -$9.33 million or 8.19% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • VGGL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 53.93%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, VIGGLE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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