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Citrix Systems (CTXS) 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 Citrix Systems ( CTXS) 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 Citrix Systems as such a stock due to the following factors:

  • CTXS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $122.3 million.
  • CTXS has traded 3.0 million shares today.
  • CTXS traded in a range 218.3% of the normal price range with a price range of $3.07.
  • CTXS traded below its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CTXS with the Ticky from Trade-Ideas. See the FREE profile for CTXS NOW at Trade-Ideas

More details on CTXS:

Citrix Systems, Inc. provides virtualization, networking, and cloud infrastructure solutions worldwide. The company operates in two divisions, Enterprise and Service Provider, and SaaS division. CTXS has a PE ratio of 34.1. Currently there are 14 analysts that rate Citrix Systems a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Citrix Systems has been 3.3 million shares per day over the past 30 days. Citrix Systems has a market cap of $11.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.32 and a short float of 1.9% with 1.72 days to cover. Shares are down 3.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Citrix Systems as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 21.6% when compared to the same quarter one year prior, going from $114.03 million to $138.64 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CITRIX SYSTEMS INC has improved earnings per share by 23.3% 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, CITRIX SYSTEMS INC reported lower earnings of $1.81 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $1.81).
  • CTXS has underperformed the S&P 500 Index, declining 14.05% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, CITRIX SYSTEMS INC's return on equity is below that of both the industry average and the S&P 500.

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