Cumulus Media (CMLS) Showing Signs Of Perilous Reversal 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 Cumulus Media ( CMLS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cumulus Media as such a stock due to the following factors:

  • CMLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.2 million.
  • CMLS has traded 1.1 million shares today.
  • CMLS is down 3% today.
  • CMLS was up 6% yesterday.

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More details on CMLS:

Cumulus Media Inc. owns and operates commercial radio station clusters in the United States. It sells local, regional, and national advertising for broadcast on its radio stations. CMLS has a PE ratio of 16.7. Currently there are 3 analysts that rate Cumulus Media a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cumulus Media has been 2.0 million shares per day over the past 30 days. Cumulus Media has a market cap of $1.1 billion and is part of the services sector and media industry. The stock has a beta of 1.82 and a short float of 5.5% with 3.29 days to cover. Shares are down 35.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cumulus Media as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including unimpressive growth in net income, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • CMLS's revenue growth has slightly outpaced the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 13.3%. 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.
  • CUMULUS MEDIA INC's earnings per share declined by 45.5% 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, CUMULUS MEDIA INC turned its bottom line around by earning $0.00 versus -$0.67 in the prior year. This year, the market expects an increase in earnings to $0.23 from $0.00.
  • In its most recent trading session, CMLS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • 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 Media industry. The net income has significantly decreased by 44.1% when compared to the same quarter one year ago, falling from $27.10 million to $15.14 million.
  • The gross profit margin for CUMULUS MEDIA INC is currently lower than what is desirable, coming in at 32.42%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.61% trails 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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