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 FXCM ( FXCM) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified FXCM as such a stock due to the following factors:

  • FXCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $86.4 million.
  • FXCM has traded 3.9 million shares today.
  • FXCM is down 17.4% today.
  • FXCM was up 33% yesterday.

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More details on FXCM:

FXCM Inc., through its subsidiaries, provides online foreign exchange (FX) trading and related services to retail and institutional customers worldwide. It operates in two segments, Retail Trading and Institutional Trading. The stock currently has a dividend yield of 15%. FXCM has a PE ratio of 16.0. Currently there is 1 analyst that rates FXCM a buy, 3 analysts rate it a sell, and 2 rate it a hold.

The average volume for FXCM has been 2.1 million shares per day over the past 30 days. FXCM has a market cap of $75.5 million and is part of the financial sector and financial services industry. The stock has a beta of 0.69 and a short float of 16.3% with 0.19 days to cover. Shares are down 85.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates FXCM as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • FXCM's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 2.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 146.7% when compared to the same quarter one year prior, rising from -$5.12 million to $2.39 million.
  • FXCM INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FXCM INC increased its bottom line by earning $0.48 versus $0.38 in the prior year. For the next year, the market is expecting a contraction of 30.0% in earnings ($0.34 versus $0.48).
  • 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 Capital Markets industry and the overall market on the basis of return on equity, FXCM INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for FXCM INC is rather low; currently it is at 22.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.06% significantly trails 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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