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Riverbed Technology (RVBD) Marked As A Barbarian At The Gate

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 Riverbed Technology ( RVBD) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Riverbed Technology as such a stock due to the following factors:

  • RVBD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.2 million.
  • RVBD has traded 888,084 shares today.
  • RVBD traded in a range 253.2% of the normal price range with a price range of $1.38.
  • RVBD traded above its daily resistance level (quality: 17 days, meaning that the stock is crossing a resistance level set by the last 17 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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

More details on RVBD:

Riverbed Technology, Inc. provides application performance infrastructure solutions in the United States and internationally. It offers Steelhead products, a suite of WAN optimization products delivered on virtual appliances, software, and public cloud environments. Currently there are 5 analysts that rate Riverbed Technology a buy, 1 analyst rates it a sell, and 20 rate it a hold.

The average volume for Riverbed Technology has been 2.1 million shares per day over the past 30 days. Riverbed Technology has a market cap of $3.0 billion and is part of the technology sector and computer software & services industry. Shares are up 4.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Riverbed Technology as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 27.27% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although RVBD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • RIVERBED TECHNOLOGY INC reported significant earnings per share improvement 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, RIVERBED TECHNOLOGY INC swung to a loss, reporting -$0.08 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus -$0.08).
  • RVBD's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RVBD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.52 is high and demonstrates strong liquidity.
  • 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. Compared to other companies in the Communications Equipment industry and the overall market, RIVERBED TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.

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