Digital Ally (DGLY) Showing Signs Of Perilous Reversal Today

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

  • DGLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.0 million.
  • DGLY has traded 68,717 shares today.
  • DGLY is down 16.4% today.
  • DGLY was up 5.3% yesterday.

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More details on DGLY:

Digital Ally, Inc. produces digital video imaging and storage products for use in law enforcement, security, and commercial applications in the United States and internationally.

The average volume for Digital Ally has been 608,600 shares per day over the past 30 days. Digital Ally has a market cap of $67.2 million and is part of the technology sector and electronics industry. The stock has a beta of 5.07 and a short float of 27.5% with 0.73 days to cover. Shares are up 9.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Digital Ally as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, DIGITAL ALLY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • DIGITAL ALLY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DIGITAL ALLY INC reported poor results of -$3.44 versus -$1.14 in the prior year.
  • DGLY's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.74 is weak.
  • The gross profit margin for DIGITAL ALLY INC is rather high; currently it is at 63.44%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -16.62% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 200.00% to $0.53 million when compared to the same quarter last year. In addition, DIGITAL ALLY INC has also vastly surpassed the industry average cash flow growth rate of -26.20%.

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