Trade-Ideas LLC identified

Wayfair

(

W

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

  • W has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.8 million.
  • W has traded 68,560 shares today.
  • W is up 3.9% today.
  • W was down 5.9% yesterday.

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More details on W:

Wayfair Inc. engages in the e-commerce business in the United States. It offers approximately seven million products for the home under various brands. Currently there are 6 analysts that rate Wayfair a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Wayfair has been 1.2 million shares per day over the past 30 days. Wayfair has a market cap of $3.7 billion and is part of the services sector and retail industry. Shares are down 14.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Wayfair as a

sell

. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:

  • The gross profit margin for WAYFAIR INC is rather low; currently it is at 24.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.09% trails that of the industry average.
  • Compared to other companies in the Internet & Catalog Retail industry and the overall market, WAYFAIR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • W has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 64.41% to $90.37 million when compared to the same quarter last year. In addition, WAYFAIR INC has also modestly surpassed the industry average cash flow growth rate of 61.95%.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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