Trade-Ideas: One Horizon Group (OHGI) Is Today's

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

  • OHGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.
  • OHGI has traded 987,876 shares today.
  • OHGI is down 7.5% today.
  • OHGI was up 13.2% yesterday.

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More details on OHGI:

One Horizon Group, Inc., through its subsidiaries, develops and licenses software solutions to telecommunications operators in Europe, Asia, the Russian Federation, and the United States.

The average volume for One Horizon Group has been 759,100 shares per day over the past 30 days. One Horizon Group has a market cap of $115.4 million and is part of the technology sector and computer software & services industry. The stock has a beta of -2.43 and a short float of 0.1% with 0.00 days to cover. Shares are up 99.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates One Horizon Group as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 161.7% when compared to the same quarter one year ago, falling from $0.98 million to -$0.61 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, ONE HORIZON GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ONE HORIZON GROUP 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ONE HORIZON GROUP INC swung to a loss, reporting -$0.07 versus $0.04 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.07).
  • OHGI, with its very weak revenue results, has greatly underperformed against the industry average of 2.2%. Since the same quarter one year prior, revenues plummeted by 71.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.

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