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

Twitter

(

TWTR

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

  • TWTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $816.4 million.
  • TWTR has traded 18.4 million shares today.
  • TWTR is down 3.1% today.
  • TWTR was up 6.2% yesterday.

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More details on TWTR:

Twitter, Inc. operates as a global platform for public self-expression and conversation in real time. Currently there are 13 analysts that rate Twitter a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Twitter has been 20.2 million shares per day over the past 30 days. Twitter has a market cap of $31.4 billion and is part of the technology sector and internet industry. Shares are up 43.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Twitter as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • TWTR's very impressive revenue growth greatly exceeded the industry average of 18.6%. Since the same quarter one year prior, revenues leaped by 97.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TWITTER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TWITTER INC continued to lose money by earning -$0.96 versus -$1.05 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus -$0.96).
  • Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.26 is very high and demonstrates very strong liquidity.
  • Compared to other companies in the Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TWTR has underperformed the S&P 500 Index, declining 6.46% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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