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

  • YY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.8 million.
  • YY has traded 65,848 shares today.
  • YY is down 4.1% today.
  • YY was up 7.6% yesterday.

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More details on YY:

YY Inc., through its subsidiaries, operates an online social platform in the People's Republic of China. YY has a PE ratio of 23. Currently there are 5 analysts that rate YY a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for YY has been 1.5 million shares per day over the past 30 days. YY has a market cap of $4.0 billion and is part of the technology sector and internet industry. Shares are up 20.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates YY as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • YY's very impressive revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues leaped by 73.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 41.51% is the gross profit margin for YY INC -ADR which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.73% trails the industry average.
  • The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.97, which shows the ability to cover short-term cash needs.

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