Perilous Reversal Stock: Tim Participacoes (TSU)

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

  • TSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.6 million.
  • TSU has traded 427,798 shares today.
  • TSU is down 3.2% today.
  • TSU was up 10.8% yesterday.

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More details on TSU:

TIM Participac es S.A., through its subsidiaries, provides telecommunication services in Brazil. The company offers mobile, fixed, and long distance telephony; data transmission; and Internet services. The stock currently has a dividend yield of 2.9%. TSU has a PE ratio of 16.8. Currently there are 3 analysts that rate Tim Participacoes a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Tim Participacoes has been 915,600 shares per day over the past 30 days. Tim Participacoes has a market cap of $12.3 billion and is part of the technology sector and telecommunications industry. Shares are up 7.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tim Participacoes as a hold. 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. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • TSU's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, TSU's share price has jumped by 33.03%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Wireless Telecommunication Services industry average, but is greater than that of the S&P 500. The net income increased by 4.9% when compared to the same quarter one year prior, going from $161.86 million to $169.87 million.
  • 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. When compared to other companies in the Wireless Telecommunication Services industry and the overall market, TIM PARTICIPACOES SA's return on equity is below that of both the industry average and the S&P 500.

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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