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

  • CIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.5 million.
  • CIG has traded 107,258 shares today.
  • CIG is down 3% today.
  • CIG was up 8.2% yesterday.

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More details on CIG:

Companhia Energetica de Minas Gerais S.A., through its subsidiaries, engages in the generation, transformation, transmission, distribution, and sale of electric energy primarily in Minas Gerais, Brazil. The stock currently has a dividend yield of 3%. Currently there is 1 analyst that rates Energy Company of Minas Gerais a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Energy Company of Minas Gerais has been 4.5 million shares per day over the past 30 days. Energy Company of Minas Gerais has a market cap of $3.2 billion and is part of the utilities sector and utilities industry. Shares are up 63.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energy Company of Minas Gerais as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • CIA ENERGETICA DE MINAS's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CIA ENERGETICA DE MINAS reported lower earnings of $1.41 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 78.1% in earnings ($0.31 versus $1.41).
  • 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 Electric Utilities industry. The net income has significantly decreased by 47.7% when compared to the same quarter one year ago, falling from $349.44 million to $182.71 million.
  • The gross profit margin for CIA ENERGETICA DE MINAS is rather low; currently it is at 22.92%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 10.28% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $314.63 million or 56.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% 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.

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