Bitauto Holdings (BITA) Showing Signs Of A Dead Cat Bounce Today

Trade-Ideas LLC identified Bitauto Holdings ( BITA) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Bitauto Holdings as such a stock due to the following factors:

  • BITA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.7 million.
  • BITA has traded 189,412 shares today.
  • BITA is up 4.7% today.
  • BITA was down 5.7% yesterday.

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More details on BITA:

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry in the People's Republic of China. The company operates in four segments: bitauto.com Advertising Business, EP Platform Business, taoche.com Business, and Digital Marketing Solutions Business. BITA has a PE ratio of 62. Currently there are 3 analysts that rate Bitauto Holdings a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Bitauto Holdings has been 878,800 shares per day over the past 30 days. Bitauto has a market cap of $2.1 billion and is part of the technology sector and internet industry. Shares are down 55.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bitauto Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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:
  • BITA's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 92.3%. 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.
  • BITA 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. Along with this, the company maintains a quick ratio of 3.98, which clearly demonstrates the ability to cover short-term cash needs.
  • BITAUTO HOLDINGS LTD -ADR 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BITAUTO HOLDINGS LTD -ADR increased its bottom line by earning $1.75 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($6.10 versus $1.75).
  • 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 Internet Software & Services industry. The net income has significantly decreased by 151.1% when compared to the same quarter one year ago, falling from $18.69 million to -$9.56 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Internet Software & Services industry and the overall market, BITAUTO HOLDINGS LTD -ADR's return on equity is below that of both the industry average and the S&P 500.

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