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.

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

  • NSR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.4 million.
  • NSR has traded 161,755 shares today.
  • NSR is down 3.1% today.
  • NSR was up 5.5% yesterday.

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More details on NSR:

NeuStar, Inc. provides real-time information services and analytics worldwide. The company serves marketing and security functions in the communications, financial services, media and advertising, retail and e-commerce, Internet, and technology industries. NSR has a PE ratio of 9.5. Currently there is 1 analyst that rates NeuStar a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for NeuStar has been 1.1 million shares per day over the past 30 days. NeuStar has a market cap of $1.5 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 2.06 and a short float of 52.3% with 25.60 days to cover. Shares are down 1.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 20.1%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NEUSTAR INC has improved earnings per share by 39.0% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NEUSTAR INC increased its bottom line by earning $2.77 versus $2.47 in the prior year. This year, the market expects an improvement in earnings ($4.37 versus $2.77).
  • Even though the current debt-to-equity ratio is 1.28, it is still below the industry average, suggesting that this level of debt is acceptable within the IT Services industry. Despite the fact that NSR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.42 is high and demonstrates strong liquidity.
  • 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. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, NEUSTAR INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • NSR has underperformed the S&P 500 Index, declining 24.71% 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.

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