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

  • PEIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.0 million.
  • PEIX has traded 65,778 shares today.
  • PEIX is up 3.1% today.
  • PEIX was down 7.6% yesterday.

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More details on PEIX:

Pacific Ethanol, Inc. produces and markets low-carbon renewable fuels in the United States. It sells ethanol to gasoline refining and distribution companies. PEIX has a PE ratio of 4.3. Currently there are 3 analysts that rate Pacific Ethanol a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Pacific Ethanol has been 1.3 million shares per day over the past 30 days. Pacific Ethanol has a market cap of $275.5 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.65 and a short float of 18.8% with 1.70 days to cover. Shares are up 0.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pacific Ethanol as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. 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:
  • The revenue growth greatly exceeded the industry average of 19.8%. Since the same quarter one year prior, revenues rose by 19.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • PEIX's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.80, which clearly demonstrates the ability to cover short-term cash needs.
  • PACIFIC ETHANOL INC's earnings per share declined by 7.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PACIFIC ETHANOL INC turned its bottom line around by earning $0.64 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $0.64).
  • Looking at the price performance of PEIX's shares over the past 12 months, there is not much good news to report: the stock is down 25.45%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • The gross profit margin for PACIFIC ETHANOL INC is currently extremely low, coming in at 7.17%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 4.88% is above that of 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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