ChinaCache International Holdings (CCIH) Showing Signs Of A Dead Cat Bounce 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 ChinaCache International Holdings ( CCIH) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ChinaCache International Holdings as such a stock due to the following factors:

  • CCIH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.6 million.
  • CCIH has traded 53,564 shares today.
  • CCIH is up 7.2% today.
  • CCIH was down 5.3% yesterday.

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More details on CCIH:

ChinaCache International Holdings Ltd. provides Internet content and application delivery services to businesses, government agencies, and enterprises in China.

The average volume for ChinaCache International Holdings has been 876,600 shares per day over the past 30 days. ChinaCache International has a market cap of $603.4 million and is part of the technology sector and internet industry. Shares are up 152.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ChinaCache International Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • CCIH's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 54.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although CCIH's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.42, which illustrates the ability to avoid short-term cash problems.
  • CHINACACHE INTL HLDGS -ADR reported significant earnings per share improvement 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, CHINACACHE INTL HLDGS -ADR reported poor results of -$0.23 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.23).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, CHINACACHE INTL HLDGS -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINACACHE INTL HLDGS -ADR is currently lower than what is desirable, coming in at 31.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.46% is significantly below that of the industry average.

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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