Trade-Ideas: E-Commerce China Dangdang (DANG) Is Today's

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

  • DANG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.9 million.
  • DANG has traded 166,813 shares today.
  • DANG is up 3% today.
  • DANG was down 9.3% yesterday.

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More details on DANG:

E-Commerce China Dangdang Inc. operates as a business-to-consumer e-commerce company in the People's Republic of China. It primarily sells books, audio-visual products, periodicals, consumer electronics, and electronic publications through its Website dangdang.com. Currently there are 2 analysts that rate E-Commerce China Dangdang a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for E-Commerce China Dangdang has been 1.6 million shares per day over the past 30 days. E-Commerce China Dangdang has a market cap of $999.0 million and is part of the services sector and retail industry. Shares are up 29.9% 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 E-Commerce China Dangdang as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for E-COMMERCE CH DANGDANG -ADR is rather low; currently it is at 18.97%. Regardless of DANG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.46% trails 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 Internet & Catalog Retail industry and the overall market, E-COMMERCE CH DANGDANG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock has increased by 41.70% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • DANG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.

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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