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

  • SCTY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $175.0 million.
  • SCTY has traded 2.9 million shares today.
  • SCTY is down 3.1% today.
  • SCTY was up 12.3% yesterday.

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More details on SCTY:

SolarCity Corporation designs, manufactures, installs, maintains, monitors, leases, and sells solar energy systems to residential, commercial, government, and other customers in the United States. Currently there are 10 analysts that rate SolarCity a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for SolarCity has been 3.6 million shares per day over the past 30 days. SolarCity has a market cap of $3.6 billion and is part of the utilities sector and utilities industry. The stock has a beta of 1.87 and a short float of 54.4% with 7.40 days to cover. Shares are down 22.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SolarCity as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • 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 Electrical Equipment industry. The net income has significantly decreased by 199.2% when compared to the same quarter one year ago, falling from $19.24 million to -$19.07 million.
  • The debt-to-equity ratio is very high at 3.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SCTY has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SOLARCITY CORP is rather low; currently it is at 22.21%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -16.75% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$214.40 million or 851.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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