Barbarian At The Gate: Netflix (NFLX)
Trade-Ideas LLC identified
(
) 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 Netflix as such a stock due to the following factors:
- NFLX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $1.2 billion.
- NFLX has traded 9.7 million shares today.
- NFLX traded in a range 230.7% of the normal price range with a price range of $6.99.
- NFLX traded above its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 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.
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More details on NFLX:
Netflix, Inc., an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. The Company operates in three segments: Domestic streaming, International streaming and Domestic DVD. NFLX has a PE ratio of 333. Currently there are 17 analysts that rate Netflix a buy, 2 analysts rate it a sell, and 8 rate it a hold.
The average volume for Netflix has been 12.9 million shares per day over the past 30 days. Netflix has a market cap of $41.4 billion and is part of the services sector and media industry. The stock has a beta of 0.97 and a short float of 8.7% with 3.08 days to cover. Shares are down 15.5% year-to-date as of the close of trading on Friday.
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Analysis:
rates Netflix as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- NFLX's revenue growth trails the industry average of 42.6%. Since the same quarter one year prior, revenues rose by 24.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 85.91%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.41% trails the industry average.
- 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. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$228.59 million or 79.45% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Netflix Ratings Report.
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