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

  • GRPN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.5 million.
  • GRPN has traded 2.0 million shares today.
  • GRPN is down 3.1% today.
  • GRPN was up 28.8% yesterday.

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More details on GRPN:

Groupon, Inc. operates online local commerce marketplaces that connect merchants to consumers by offering goods and services at a discount in North America, Europe, the Middle East, Africa, and internationally. It also provides deals on products for which it acts as the merchant of record. Currently there are 3 analysts that rate Groupon a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Groupon has been 6.9 million shares per day over the past 30 days. Groupon has a market cap of $2.2 billion and is part of the technology sector and internet industry. The stock has a beta of 0.81 and a short float of 20.4% with 3.97 days to cover. Shares are up 58.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Groupon as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, 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 Internet & Catalog Retail industry. The net income has significantly decreased by 150.3% when compared to the same quarter one year ago, falling from $109.08 million to -$54.90 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 Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$54.01 million or 418.13% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of GROUPON INC has not done very well: it is down 23.33% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • GROUPON 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, GROUPON INC reported poor results of -$0.16 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.16).

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