NetApp (NTAP) Showing Signs Of Being Water-Logged And Getting Wetter
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 NetApp as such a stock due to the following factors:
- NTAP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $111.5 million.
- NTAP has traded 78,432 shares today.
- NTAP traded in a range 220.8% of the normal price range with a price range of $1.33.
- NTAP traded below its daily resistance level (quality: 22 days, meaning that the stock is crossing a resistance level set by the last 22 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 NTAP with the Ticky from Trade-Ideas. See the FREE profile for NTAP NOW at Trade-Ideas
More details on NTAP:
NetApp, Inc. is engaged in design, manufacture, and marketing of networked storage solutions. The company provides storage and data management software, systems, and services. The stock currently has a dividend yield of 1.7%. NTAP has a PE ratio of 20.3. Currently there are 7 analysts that rate NetApp a buy, 3 analysts rate it a sell, and 15 rate it a hold.
The average volume for NetApp has been 2.9 million shares per day over the past 30 days. NetApp has a market cap of $12.0 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.32 and a short float of 3.2% with 2.63 days to cover. Shares are down 8.5% year-to-date as of the close of trading on Tuesday.
Analysis:
rates NetApp as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- NETAPP INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NETAPP INC increased its bottom line by earning $1.85 versus $1.37 in the prior year. This year, the market expects an improvement in earnings ($2.78 versus $1.85).
- The gross profit margin for NETAPP INC is rather high; currently it is at 68.13%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NTAP's net profit margin of 11.39% significantly trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NTAP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.38 is high and demonstrates strong liquidity.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, NETAPP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The revenue fell significantly faster than the industry average of 31.5%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full NetApp Ratings Report.
null