Perilous Reversal Watch: Noah Holdings (NOAH)

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

  • NOAH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.8 million.
  • NOAH has traded 57,003 shares today.
  • NOAH is down 3.7% today.
  • NOAH was up 9.6% yesterday.

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More details on NOAH:

Noah Holdings Limited, through its subsidiaries, operates as a wealth management service provider with focus on wealth investment and asset allocation services for high net worth individuals and enterprises in the People's Republic of China. NOAH has a PE ratio of 31. Currently there are no analysts that rate Noah Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Noah Holdings has been 690,900 shares per day over the past 30 days. Noah has a market cap of $1.6 billion and is part of the financial sector and financial services industry. Shares are up 32% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Noah Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 42.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 124.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOAH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NOAH HOLDINGS LTD -ADR has improved earnings per share by 23.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NOAH HOLDINGS LTD -ADR increased its bottom line by earning $1.29 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus $1.29).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Capital Markets industry average. The net income increased by 25.5% when compared to the same quarter one year prior, rising from $16.88 million to $21.18 million.
  • 49.36% is the gross profit margin for NOAH HOLDINGS LTD -ADR which we consider to be strong. Regardless of NOAH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NOAH's net profit margin of 29.50% compares favorably to the industry average.

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