Noah Holdings (NOAH) Is Today's Perilous Reversal Stock

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

  • NOAH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.6 million.
  • NOAH has traded 111,889 shares today.
  • NOAH is down 4.1% today.
  • NOAH was up 5.2% yesterday.

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More details on NOAH:

Noah Holdings Limited, through its subsidiaries, operates as a wealth management service provider with focus on wealth investment and asset allocation services for high net worth individuals and enterprises in the People's Republic of China. NOAH has a PE ratio of 36.7. Currently there is 1 analyst that rates Noah Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Noah Holdings has been 583,200 shares per day over the past 30 days. Noah has a market cap of $1.9 billion and is part of the financial sector and financial services industry. Shares are up 61.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Noah Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 39.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Capital Markets industry and the overall market, NOAH HOLDINGS LTD -ADR's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 151.78% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOAH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NOAH HOLDINGS LTD -ADR has improved earnings per share by 8.3% 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. During the past fiscal year, NOAH HOLDINGS LTD -ADR increased its bottom line by earning $1.29 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.29).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Capital Markets industry average, but is greater than that of the S&P 500. The net income increased by 10.2% when compared to the same quarter one year prior, going from $13.39 million to $14.76 million.

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