Today's Dead Cat Bounce Stock: MRC Global (MRC)

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

  • MRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.9 million.
  • MRC has traded 282,121 shares today.
  • MRC is up 3.1% today.
  • MRC was down 15.4% yesterday.

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More details on MRC:

MRC Global Inc. distributes pipes, valves, and fittings (PVF), and related products and services to the energy industry worldwide. MRC has a PE ratio of 20.0. Currently there are 8 analysts that rate MRC Global a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for MRC Global has been 923,700 shares per day over the past 30 days. MRC Global has a market cap of $3.0 billion and is part of the industrial goods sector and industrial industry. Shares are down 22.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MRC Global as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • MRC GLOBAL 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. This trend suggests that the performance of the business is improving. During the past fiscal year, MRC GLOBAL INC increased its bottom line by earning $1.49 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $1.49).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 461.7% when compared to the same quarter one year prior, rising from -$6.44 million to $23.30 million.
  • MRC's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.10 is sturdy.
  • The gross profit margin for MRC GLOBAL INC is rather low; currently it is at 17.99%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.73% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $82.21 million or 52.83% 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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