MRC Global (MRC) In A Perilous Reversal

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

  • MRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.3 million.
  • MRC has traded 62,141 shares today.
  • MRC is down 4.7% today.
  • MRC was up 11.8% yesterday.

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More details on MRC:

MRC Global Inc., through its subsidiaries, distributes pipes, valves, fittings, and related products and services to the energy and industrial sectors in the Unites States, Canada, and internationally. MRC has a PE ratio of 11. Currently there are 4 analysts that rate MRC Global a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for MRC Global has been 1.9 million shares per day over the past 30 days. MRC Global has a market cap of $932.1 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.52 and a short float of 6.8% with 2.11 days to cover. Shares are down 27.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MRC Global as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 Trading Companies & Distributors industry. The net income has significantly decreased by 1361.2% when compared to the same quarter one year ago, falling from $31.16 million to -$392.94 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. Compared to other companies in the Trading Companies & Distributors industry and the overall market, MRC GLOBAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MRC GLOBAL INC is rather low; currently it is at 20.12%. Regardless of MRC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MRC's net profit margin of -40.63% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.62%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1406.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MRC GLOBAL INC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MRC GLOBAL INC swung to a loss, reporting -$3.39 versus $1.40 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus -$3.39).

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