Trade-Ideas: EBay (EBAY) Is Today's "Roof Leaker" 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 eBay (EBAY) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified eBay as such a stock due to the following factors:
- EBAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $402.6 million.
- EBAY has traded 5.2 million shares today.
- EBAY is trading at 1.82 times the normal volume for the stock at this time of day.
- EBAY crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.EXCLUSIVE OFFER: Get the inside scoop on opportunities in EBAY with the Ticky from Trade-Ideas. See the FREE profile for EBAY NOW at Trade-IdeasMore details on EBAY: eBay Inc. provides online platforms, tools, and services to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. EBAY has a PE ratio of 27.2. Currently there are 24 analysts that rate eBay a buy, no analysts rate it a sell, and 7 rate it a hold.The average volume for eBay has been 9.4 million shares per day over the past 30 days. eBay has a market cap of $71.4 billion and is part of the services sector and retail industry. The stock has a beta of 0.98 and a short float of 1.3% with 2.08 days to cover. Shares are up 8.2% 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 eBay as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 14.1%. 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.
- Although EBAY's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. To add to this, EBAY has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $1,011.00 million or 31.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.22%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full eBay Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV