Perilous Reversal Watch: Bitauto Holdings (BITA)

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 Bitauto Holdings ( BITA) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Bitauto Holdings as such a stock due to the following factors:

  • BITA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $231.5 million.
  • BITA has traded 226,404 shares today.
  • BITA is down 3% today.
  • BITA was up 5.6% yesterday.

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More details on BITA:

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People's Republic of China. BITA has a PE ratio of 171.8. Currently there are 2 analysts that rate Bitauto Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Bitauto Holdings has been 1.2 million shares per day over the past 30 days. Bitauto has a market cap of $4.0 billion and is part of the technology sector and internet industry. Shares are up 200.8% year-to-date as of the close of trading on Tuesday.

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 Bitauto Holdings as a buy. 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, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 47.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BITA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.69, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, BITAUTO HOLDINGS LTD -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • BITAUTO HOLDINGS LTD -ADR 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. During the past fiscal year, BITAUTO HOLDINGS LTD -ADR increased its bottom line by earning $0.95 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $0.95).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 87.2% when compared to the same quarter one year prior, rising from $3.17 million to $5.94 million.

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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