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Trade-Ideas: TIBCO Software (TIBX) Is Today's "Water-Logged And Getting Wetter" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified TIBCO Software (TIBX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified TIBCO Software as such a stock due to the following factors:

  • TIBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.1 million.
  • TIBX has traded 2.3 million shares today.
  • TIBX traded in a range 256.8% of the normal price range with a price range of $1.67.
  • TIBX traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on TIBX:

TIBCO Software Inc. provides middleware and infrastructure software worldwide. It offers products in the areas of service-oriented architecture (SOA) and core infrastructure; business optimization; and process automation and collaboration. TIBX has a PE ratio of 40.2. Currently there are 12 analysts that rate TIBCO Software a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for TIBCO Software has been 2.7 million shares per day over the past 30 days. TIBCO Software has a market cap of $4.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.05 and a short float of 2.5% with 1.19 days to cover. Shares are up 15.3% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TIBCO Software as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • TIBX's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $58.33 million or 20.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.05%.
  • Despite currently having a low debt-to-equity ratio of 0.60, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TIBX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.28 is high and demonstrates strong liquidity.
  • TIBCO SOFTWARE INC's earnings per share declined by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TIBCO SOFTWARE INC increased its bottom line by earning $0.72 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.72).
  • The gross profit margin for TIBCO SOFTWARE INC is currently very high, coming in at 74.30%. Regardless of TIBX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TIBX's net profit margin of 7.84% is significantly lower than the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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