Today's Dead Cat Bounce Stock: EnerSys (ENS)

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

  • ENS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.5 million.
  • ENS has traded 196,809 shares today.
  • ENS is up 3% today.
  • ENS was down 8.6% yesterday.

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More details on ENS:

EnerSys manufactures, markets, and distributes industrial batteries in North and South America, Europe, the Middle East, Africa, Asia, Australia, and Oceania. The company operates in three segments: Americas, EMEA, and Asia. The stock currently has a dividend yield of 1.1%. ENS has a PE ratio of 20.0. Currently there are 3 analysts that rate EnerSys a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for EnerSys has been 383,800 shares per day over the past 30 days. EnerSys has a market cap of $3.0 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.83 and a short float of 9% with 6.72 days to cover. Shares are down 17% year-to-date as of the close of trading on Thursday.

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 EnerSys as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 16.3%. 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.
  • ENS's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ENERSYS INC 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 of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ENERSYS INC reported lower earnings of $3.03 versus $3.42 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.03).
  • The gross profit margin for ENERSYS INC is currently lower than what is desirable, coming in at 29.02%. Regardless of ENS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.93% trails 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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