Today's Dead Cat Bounce Stock: Clean Diesel Technologies (CDTI)

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

  • CDTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.6 million.
  • CDTI has traded 208,404 shares today.
  • CDTI is up 3.6% today.
  • CDTI was down 7.7% yesterday.

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More details on CDTI:

Clean Diesel Technologies, Inc. manufactures and distributes light duty vehicle catalysts and heavy duty diesel emissions control systems and products to automakers, integrators, and retrofitters in the United States, Canada, Sweden, and the United Kingdom. Currently there are 2 analysts that rate Clean Diesel Technologies a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Clean Diesel Technologies has been 1.2 million shares per day over the past 30 days. Clean Diesel has a market cap of $33.6 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.30 and a short float of 4.8% with 0.07 days to cover. Shares are up 66.7% year-to-date as of the close of trading on Friday.

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 Clean Diesel Technologies as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CDTI maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to -$2.51 million or 328.37% 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 gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 33.59%. Regardless of CDTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CDTI's net profit margin of -9.44% significantly underperformed when compared to the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Auto Components industry and the overall market, CLEAN DIESEL TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • CLEAN DIESEL TECHNOLOGIES has improved earnings per share by 47.4% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CLEAN DIESEL TECHNOLOGIES continued to lose money by earning -$0.84 versus -$1.35 in the prior year. For the next year, the market is expecting a contraction of 6.0% in earnings (-$0.89 versus -$0.84).

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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