Matrix Service (MTRX) Is Today's Dead Cat Bounce Stock

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

  • MTRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.5 million.
  • MTRX has traded 163,200 shares today.
  • MTRX is up 3.2% today.
  • MTRX was down 21.5% yesterday.

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More details on MTRX:

Matrix Service Company provides engineering, fabrication, infrastructure, construction, and maintenance services primarily to the oil, gas, power, petrochemical, industrial, and mining and minerals markets principally in the United States and Canada. MTRX has a PE ratio of 21.9. Currently there are 3 analysts that rate Matrix Service a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Matrix Service has been 272,100 shares per day over the past 30 days. Matrix Service has a market cap of $769.4 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 2.67 and a short float of 2.3% with 0.94 days to cover. Shares are down 6.4% 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 Matrix Service 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, increase in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 20.5%. Since the same quarter one year prior, revenues rose by 46.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • MTRX's debt-to-equity ratio is very low at 0.04 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 1.05, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Energy Equipment & Services industry average. The net income increased by 2.6% when compared to the same quarter one year prior, going from $7.37 million to $7.56 million.
  • MATRIX SERVICE CO reported flat earnings per share in the most recent quarter. 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, MATRIX SERVICE CO increased its bottom line by earning $1.33 versus $0.92 in the prior year. This year, the market expects an improvement in earnings ($1.78 versus $1.33).
  • Compared to its closing price of one year ago, MTRX's share price has jumped by 83.55%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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