Trade-Ideas: Dreamworks Animation SKG (DWA) Is Today's

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

  • DWA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.4 million.
  • DWA has traded 442,141 shares today.
  • DWA is up 3.2% today.
  • DWA was down 8.9% yesterday.

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More details on DWA:

DreamWorks Animation SKG, Inc. is engaged in the development, production, and exploitation of animated films and their associated characters worldwide. The company opertaes through three segments: Feature Films, Television Series and Specials, and Consumer Products. DWA has a PE ratio of 42.6. Currently there are 2 analysts that rate Dreamworks Animation SKG a buy, 5 analysts rate it a sell, and 2 rate it a hold.

The average volume for Dreamworks Animation SKG has been 1.2 million shares per day over the past 30 days. Dreamworks Animation SKG has a market cap of $2.0 billion and is part of the services sector and media industry. Shares are down 25.7% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dreamworks Animation SKG as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 120.8% when compared to the same quarter one year prior, rising from -$82.71 million to $17.19 million.
  • DWA's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • 41.65% is the gross profit margin for DREAMWORKS ANIMATION INC which we consider to be strong. 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 8.41% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Media industry and the overall market, DREAMWORKS ANIMATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$43.45 million or 34381.74% 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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