Sinocoking Coal And Coke Chemicals (SCOK) Showing Signs Of A Dead Cat Bounce 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 Sinocoking Coal and Coke Chemicals ( SCOK) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sinocoking Coal and Coke Chemicals as such a stock due to the following factors:

  • SCOK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.2 million.
  • SCOK has traded 593,424 shares today.
  • SCOK is up 3.8% today.
  • SCOK was down 7.1% yesterday.

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More details on SCOK:

SinoCoking Coal and Coke Chemical Industries, Inc. operates as a coal and coke producer in the People's Republic of China. Its products include raw coal, washed coal, medium or mid-coal, coal slurries, coke, coal tar, and crude benzol. It provides metallurgical coke for steel manufacturing. SCOK has a PE ratio of 78.4.

The average volume for Sinocoking Coal and Coke Chemicals has been 2.0 million shares per day over the past 30 days. Sinocoking Coal and Coke has a market cap of $82.8 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.06 and a short float of 2% with 0.05 days to cover. Shares are up 213.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sinocoking Coal and Coke Chemicals as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 46.8% when compared to the same quarter one year prior, rising from $0.50 million to $0.74 million.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SCOK has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SCOK, with its decline in revenue, underperformed when compared the industry average of 3.1%. Since the same quarter one year prior, revenues fell by 20.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly decreased to $0.01 million or 99.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SINOCOKING COAL & COKE CHEM's return on equity significantly trails that of both the industry average and the S&P 500.

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