Sigma Designs (SIGM) Marked As A Dead Cat Bounce 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 Sigma Designs ( SIGM) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sigma Designs as such a stock due to the following factors:

  • SIGM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.3 million.
  • SIGM has traded 631,479 shares today.
  • SIGM is up 3.1% today.
  • SIGM was down 5.4% yesterday.

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More details on SIGM:

Sigma Designs, Inc., an integrated semiconductor solutions provider, provides intelligent media platforms for use in the home entertainment and home control markets. Currently there are 5 analysts that rate Sigma Designs a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sigma Designs has been 488,600 shares per day over the past 30 days. Sigma Designs has a market cap of $433.8 million and is part of the technology sector and electronics industry. The stock has a beta of 1.19 and a short float of 3.7% with 1.07 days to cover. Shares are up 56.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sigma Designs as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • SIGM's very impressive revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues leaped by 51.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIGM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SIGM has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to -$4.68 million or 25.60% when compared to the same quarter last year. Despite an increase in cash flow, SIGMA DESIGNS INC's average is still marginally south of the industry average growth rate of 28.23%.
  • The gross profit margin for SIGMA DESIGNS INC is rather high; currently it is at 61.96%. Regardless of SIGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SIGM's net profit margin of -0.68% significantly underperformed when compared to 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 Semiconductors & Semiconductor Equipment industry and the overall market, SIGMA DESIGNS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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