Kate Spade (KATE) Is Water-Logged And Getting Wetter Today
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
(
) 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 Kate Spade as such a stock due to the following factors:
- KATE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.3 million.
- KATE has traded 395,867 shares today.
- KATE traded in a range 221.1% of the normal price range with a price range of $1.48.
- KATE traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 KATE:
Kate Spade & Company, together with its subsidiaries, primarily designs and markets a range of apparel and accessories. It operates through KATE SPADE, Adelington Design Group, and JUICY COUTURE segments. KATE has a PE ratio of 48.5. Currently there are 7 analysts that rate Kate Spade a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Kate Spade has been 1.9 million shares per day over the past 30 days. Kate Spade has a market cap of $4.4 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.08 and a short float of 6.7% with 8.08 days to cover. Shares are up 10.3% year-to-date as of the close of trading on Monday.
Analysis:
rates Kate Spade as a
. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and premium valuation.
Highlights from the ratings report include:
- Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, KATE SPADE & CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The revenue growth came in higher than the industry average of 17.4%. Since the same quarter one year prior, revenues rose by 30.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to -$29.32 million or 22.53% when compared to the same quarter last year. Despite an increase in cash flow, KATE SPADE & CO's cash flow growth rate is still lower than the industry average growth rate of 45.60%.
- The debt-to-equity ratio is very high at 5.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, KATE has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Kate Spade Ratings Report.
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