Perilous Reversal Stock: Advanced Energy Industries (AEIS)

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

  • AEIS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.4 million.
  • AEIS has traded 232,838 shares today.
  • AEIS is down 3.6% today.
  • AEIS was up 25.8% yesterday.

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More details on AEIS:

Advanced Energy Industries, Inc., together with its subsidiaries, designs, manufactures, sells, and supports power conversion products that transform power into various usable forms. AEIS has a PE ratio of 20.0. Currently there are 2 analysts that rate Advanced Energy Industries a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Advanced Energy Industries has been 336,300 shares per day over the past 30 days. Advanced Energy has a market cap of $821.9 million and is part of the technology sector and electronics industry. The stock has a beta of 1.42 and a short float of 2.3% with 1.19 days to cover. Shares are up 49.5% year to date as of the close of trading on Tuesday.

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 Advanced Energy Industries as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • AEIS's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AEIS has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its closing price of one year ago, AEIS's share price has jumped by 76.50%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, ADVANCED ENERGY INDS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$9.46 million or 131.42% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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