Today's Perilous Reversal Stock: Kandi Technologies Group (KNDI)

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

  • KNDI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.7 million.
  • KNDI has traded 396,357 shares today.
  • KNDI is down 3.6% today.
  • KNDI was up 5.9% yesterday.

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More details on KNDI:

Kandi Technologies Group, Inc., through its subsidiaries, engages in the design, development, manufacture, and commercialization of various vehicles.

The average volume for Kandi Technologies Group has been 2.0 million shares per day over the past 30 days. Kandi Technologies Group has a market cap of $482.2 million and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.77 and a short float of 17.7% with 2.68 days to cover. Shares are up 10.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kandi Technologies Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 34.3%. 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, KNDI's share price has jumped by 209.58%, exceeding the performance of the broader market during that same time frame. Although KNDI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.48 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • KANDI TECHNOLOGIES GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, KANDI TECHNOLOGIES GROUP reported lower earnings of $0.20 versus $0.31 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 1392.3% when compared to the same quarter one year ago, falling from $0.60 million to -$7.69 million.

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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