GrafTech International (GTI) Is Today's Perilous Reversal 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 GrafTech International ( GTI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified GrafTech International as such a stock due to the following factors:

  • GTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.6 million.
  • GTI has traded 151,163 shares today.
  • GTI is down 3.2% today.
  • GTI was up 5.2% yesterday.

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More details on GTI:

GrafTech International Ltd. manufactures and sells graphite and carbon material science-based solutions. It operates in two segments, Industrial Materials and Engineered Solutions. Currently there is 1 analyst that rates GrafTech International a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for GrafTech International has been 1.4 million shares per day over the past 30 days. GrafTech International has a market cap of $606.0 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.52 and a short float of 18.5% with 4.35 days to cover. Shares are down 58.3% year-to-date as of the close of trading on Monday.

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 GrafTech International as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 3647.1% when compared to the same quarter one year ago, falling from $4.38 million to -$155.43 million.
  • 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 Electrical Equipment industry and the overall market, GRAFTECH INTERNATIONAL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GRAFTECH INTERNATIONAL LTD is rather low; currently it is at 21.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -54.69% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3900.00% compared to the year-earlier 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.
  • GRAFTECH INTERNATIONAL LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GRAFTECH INTERNATIONAL LTD swung to a loss, reporting -$0.21 versus $0.84 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.21).

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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