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 or Stephanie Link. Trade-Ideas LLC identified Alcatel-Lucent ( ALU) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alcatel-Lucent as such a stock due to the following factors:
- ALU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.3 million.
- ALU has traded 15.4 million shares today.
- ALU is up 5.6% today.
- ALU was down 5.6% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in ALU with the Ticky from Trade-Ideas. See the FREE profile for ALU NOW at Trade-Ideas More details on ALU: Alcatel-Lucent provides networking and communications technology, products, and services to service providers, enterprises, and governments worldwide. The stock currently has a dividend yield of 5.3%. Currently there are 4 analysts that rate Alcatel-Lucent a buy, 2 analysts rate it a sell, and 3 rate it a hold. The average volume for Alcatel-Lucent has been 18.3 million shares per day over the past 30 days. Alcatel-Lucent has a market cap of $7.9 billion and is part of the technology sector and telecommunications industry. Shares are up 143.9% year to date as of the close of trading on Friday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Alcatel-Lucent as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share. 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 Communications Equipment industry. The net income has significantly decreased by 123.2% when compared to the same quarter one year ago, falling from -$518.90 million to -$1,158.23 million.
- The debt-to-equity ratio is very high at 3.91 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ALU maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, ALCATEL-LUCENT's return on equity significantly trails that of both the industry average and the S&P 500.
- ALCATEL-LUCENT has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALCATEL-LUCENT swung to a loss, reporting -$1.35 versus $0.37 in the prior year. This year, the market expects an improvement in earnings (-$0.46 versus -$1.35).
- 36.57% is the gross profit margin for ALCATEL-LUCENT which we consider to be strong. Regardless of ALU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALU's net profit margin of -24.32% significantly underperformed when compared to the industry average.
- You can view the full Alcatel-Lucent Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.