Today's Dead Cat Bounce Stock Is AVG Technologies (AVG)

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

  • AVG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.6 million.
  • AVG has traded 6.0 million shares today.
  • AVG is up 3.7% today.
  • AVG was down 15.4% yesterday.

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More details on AVG:

AVG Technologies N.V. engages in the development and sale of Internet security software and online service solutions under the AVG brand name. AVG has a PE ratio of 15.8. Currently there is 1 analyst that rates AVG Technologies a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for AVG Technologies has been 873,000 shares per day over the past 30 days. AVG has a market cap of $1.1 billion and is part of the technology sector and computer software & services industry. Shares are up 26.5% year to date as of the close of trading on Thursday.

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 AVG Technologies as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • Compared to other companies in the Software industry and the overall market, AVG TECHNOLOGIES NV's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 21.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for AVG TECHNOLOGIES NV is currently very high, coming in at 89.64%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 21.60% trails the industry average.
  • AVG TECHNOLOGIES NV 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. During the past fiscal year, AVG TECHNOLOGIES NV increased its bottom line by earning $0.84 versus $0.01 in the prior year.
  • The debt-to-equity ratio is very high at 2.41 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.42, which clearly demonstrates the inability to cover short-term cash needs.

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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