Today's Perilous Reversal Stock: DryShips (DRYS)

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

  • DRYS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.5 million.
  • DRYS has traded 4.3 million shares today.
  • DRYS is down 3.3% today.
  • DRYS was up 5.9% yesterday.

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More details on DRYS:

DryShips Inc. owns drybulk carriers and tankers that operate worldwide. The stock currently has a dividend yield of 6%. Currently there are no analysts that rate DryShips a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for DryShips has been 15.6 million shares per day over the past 30 days. DryShips has a market cap of $1.4 billion and is part of the services sector and transportation industry. The stock has a beta of 2.47 and a short float of 3.1% with 1.41 days to cover. Shares are up 112.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates DryShips as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • DRYS's revenue growth has slightly outpaced the industry average of 8.6%. Since the same quarter one year prior, revenues rose by 17.8%. 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.
  • Compared to its closing price of one year ago, DRYS's share price has jumped by 78.80%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for DRYSHIPS INC is rather high; currently it is at 55.52%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.77% is in-line with the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Marine industry and the overall market, DRYSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $48.85 million or 40.58% 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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