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 E-Commerce China Dangdang ( DANG) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified E-Commerce China Dangdang as such a stock due to the following factors:
- DANG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.0 million.
- DANG has traded 3.1 million shares today.
- DANG is down 3.3% today.
- DANG was up 10.8% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in DANG with the Ticky from Trade-Ideas. See the FREE profile for DANG NOW at Trade-Ideas More details on DANG: E-Commerce China Dangdang Inc. operates as a business-to-consumer e-commerce company in the People's Republic of China. It primarily engages in the sale of books, audio-visual products, periodicals, and electronic publications through its Website, dangdang.com. Currently there are 3 analysts that rate E-Commerce China Dangdang a buy, 2 analysts rate it a sell, and 5 rate it a hold. The average volume for E-Commerce China Dangdang has been 3.2 million shares per day over the past 30 days. E-Commerce China Dangdang has a market cap of $618.0 million and is part of the services sector and retail industry. Shares are up 85.5% 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 E-Commerce China Dangdang as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- 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 Internet & Catalog Retail industry and the overall market, E-COMMERCE CH DANGDANG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for E-COMMERCE CH DANGDANG -ADR is rather low; currently it is at 17.96%. Regardless of DANG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -4.28% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 45.8% when compared to the same quarter one year prior, rising from -$19.23 million to -$10.42 million.
- E-COMMERCE CH DANGDANG -ADR has improved earnings per share by 45.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, E-COMMERCE CH DANGDANG -ADR reported poor results of -$0.89 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings (-$0.49 versus -$0.89).
- DANG 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. Despite the fact that DANG's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
- You can view the full E-Commerce China Dangdang 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.