WisdomTree Investments (WETF) Showing Signs Of Perilous Reversal Today

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

  • WETF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.7 million.
  • WETF has traded 2.4 million shares today.
  • WETF is down 3.1% today.
  • WETF was up 7% yesterday.

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More details on WETF:

WisdomTree Investments, Inc., through its subsidiaries, operates as an exchange-traded funds (ETFs) sponsor and asset manager. It offers ETFs in equities, currency, fixed income, and alternatives asset classes. WETF has a PE ratio of 55.5. Currently there are 4 analysts that rate WisdomTree Investments a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for WisdomTree Investments has been 1.6 million shares per day over the past 30 days. WisdomTree Investments has a market cap of $2.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 2.01 and a short float of 10.1% with 3.27 days to cover. Shares are up 181.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WisdomTree Investments as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • WETF's very impressive revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues leaped by 83.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market, WISDOMTREE INVESTMENTS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • WISDOMTREE INVESTMENTS INC 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 two years. We feel that this trend should continue. During the past fiscal year, WISDOMTREE INVESTMENTS INC increased its bottom line by earning $0.08 versus $0.03 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus $0.08).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 230.1% when compared to the same quarter one year prior, rising from $4.53 million to $14.97 million.
  • 37.97% is the gross profit margin for WISDOMTREE INVESTMENTS INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 37.76% significantly outperformed against the industry average.

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