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

  • TRQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.5 million.
  • TRQ has traded 754,019 shares today.
  • TRQ is up 3.7% today.
  • TRQ was down 5.4% yesterday.

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More details on TRQ:

Turquoise Hill Resources Ltd., together with its subsidiaries, operates as a mineral exploration, development, and mining company. The company's principal mineral resource property includes the Oyu Tolgoi project, a copper-gold project located in the South Gobi region of Mongolia. TRQ has a PE ratio of 315.0. Currently there is 1 analyst that rates Turquoise Hill Resources a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Turquoise Hill Resources has been 3.5 million shares per day over the past 30 days. Turquoise Hill has a market cap of $6.3 billion and is part of the basic materials sector and metals & mining industry. Shares are down 9.7% 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 Turquoise Hill Resources as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • TRQ's very impressive revenue growth greatly exceeded the industry average of 0.2%. Since the same quarter one year prior, revenues leaped by 7123.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TURQUOISE HILL RESOURCES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, TURQUOISE HILL RESOURCES LTD continued to lose money by earning -$0.05 versus -$0.37 in the prior year.
  • TRQ's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.37 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • TRQ has underperformed the S&P 500 Index, declining 6.55% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for TURQUOISE HILL RESOURCES LTD is currently lower than what is desirable, coming in at 33.82%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TRQ's net profit margin of 2.15% is significantly lower than 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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