Perilous Reversal Stock: Image Sensing Systems (ISNS)

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

  • ISNS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.8 million.
  • ISNS has traded 4.6 million shares today.
  • ISNS is down 3.2% today.
  • ISNS was up 16.2% yesterday.

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More details on ISNS:

Image Sensing Systems, Inc. develops and markets software-based computer enabled detection products and solutions for the intelligent transportation systems industry, and adjacent security and law enforcement markets. Currently there is 1 analyst that rates Image Sensing Systems a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Image Sensing Systems has been 795,100 shares per day over the past 30 days. Image Sensing Systems has a market cap of $33.2 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.88 and a short float of 0.2% with 0.00 days to cover. Shares are up 56.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Image Sensing Systems as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, IMAGE SENSING SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ISNS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • ISNS, with its decline in revenue, underperformed when compared the industry average of 3.5%. Since the same quarter one year prior, revenues fell by 20.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • IMAGE SENSING SYSTEMS INC has improved earnings per share by 11.4% 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, IMAGE SENSING SYSTEMS INC reported poor results of -$3.21 versus -$0.69 in the prior year. This year, the market expects an improvement in earnings (-$1.12 versus -$3.21).
  • The gross profit margin for IMAGE SENSING SYSTEMS INC is currently very high, coming in at 74.23%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -25.81% is in-line with 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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