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 $12.9 million.
  • CIG has traded 2.4 million shares today.
  • CIG is down 3.7% today.
  • CIG was up 5.4% 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 2.9%. 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 4.7 million shares per day over the past 30 days. Energy Company of Minas Gerais has a market cap of $3.4 billion and is part of the utilities sector and utilities industry. Shares are up 84.7% year-to-date as of the close of trading on Friday.

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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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • CIA ENERGETICA DE MINAS 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. 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 $0.75 versus $1.41 in the prior year. For the next year, the market is expecting a contraction of 58.1% in earnings ($0.31 versus $0.75).
  • 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 Electric Utilities industry. The net income has significantly decreased by 78.5% when compared to the same quarter one year ago, falling from $355.93 million to $76.68 million.
  • In its most recent trading session, CIG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Electric Utilities industry and the overall market, CIA ENERGETICA DE MINAS's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • CIG, with its decline in revenue, underperformed when compared the industry average of 8.4%. Since the same quarter one year prior, revenues fell by 30.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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