Today's Perilous Reversal Stock: Youku Tudou (YOKU)

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

  • YOKU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $148.0 million.
  • YOKU has traded 161,635 shares today.
  • YOKU is down 3.1% today.
  • YOKU was up 17.2% yesterday.

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More details on YOKU:

Youku Tudou Inc. operates as an Internet television company in the People's Republic of China. Its Internet television platform enables users to search, view, and share video content across various devices. Currently there are 3 analysts that rate Youku Tudou a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Youku Tudou has been 3.3 million shares per day over the past 30 days. Youku Tudou has a market cap of $4.5 billion and is part of the technology sector and internet industry. Shares are up 29.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Youku Tudou as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • YOUKU TUDOU INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, YOUKU TUDOU INC reported poor results of -$0.76 versus -$0.58 in the prior year. For the next year, the market is expecting a contraction of 810.9% in earnings (-$6.92 versus -$0.76).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 894.3% when compared to the same quarter one year ago, falling from -$5.06 million to -$50.27 million.
  • The gross profit margin for YOUKU TUDOU INC is rather low; currently it is at 22.25%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -25.27% is significantly below that of the industry average.
  • 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. Compared to other companies in the Internet Software & Services industry and the overall market, YOUKU TUDOU INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $44.54 million or 29.71% when compared to the same quarter last year. Despite an increase in cash flow, YOUKU TUDOU INC's cash flow growth rate is still lower than the industry average growth rate of 41.37%.

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