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

  • EJ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.5 million.
  • EJ has traded 204,349 shares today.
  • EJ is down 3.2% today.
  • EJ was up 13.2% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in EJ with the Ticky from Trade-Ideas. See the FREE profile for EJ NOW at Trade-Ideas

More details on EJ:

E-House (China) Holdings Limited, through its subsidiaries, operates as a real estate services company in the People's Republic of China. The stock currently has a dividend yield of 9.3%. EJ has a PE ratio of 21. Currently there is 1 analyst that rates E-House China Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for E-House China Holdings has been 2.5 million shares per day over the past 30 days. E-House China has a market cap of $770.0 million and is part of the financial sector and real estate industry. Shares are down 26.8% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates E-House China Holdings 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • EJ's revenue growth trails the industry average of 18.2%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • EJ's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EJ has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for E-HOUSE CHINA HOLDINGS -ADR is rather high; currently it is at 60.86%. Regardless of EJ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EJ's net profit margin of -14.86% significantly underperformed when compared to the industry average.
  • 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 Real Estate Management & Development industry and the overall market, E-HOUSE CHINA HOLDINGS -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of E-HOUSE CHINA HOLDINGS -ADR has not done very well: it is down 18.15% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.