Waiting on Tableau Software (DATA) Stock
NEW YORK (TheStreet) -- Price gaps have been around since the first bar chart was created perhaps 115 years ago. Gaps do not appear on line charts and point-and-figure charts. Gaps are called windows on Japanese candlestick charts, which date back to around the 1740s. Gaps are a price void created by a significant change in supply or demand for a security. The chart of Tableau Software (DATA) - Get Report is dotted with gaps.
In this chart of DATA, above, we can see a gap up in February and another one in May. In July, DATA gaps to the downside. This morning we see what may be the most dramatic gap on the chart with DATA soaring above the 50-day and 200-day moving averages.
What do you do?
For the chartist, the problem is not the direction of prices, which is key to making money in the markets. At this juncture, the problem is the risk. Where can you buy DATA and risk a reasonable amount of money? If DATA just keeps rising from here, then we can go long at the market and risk 8% from entry. If we only knew for sure, we could use a very close sell stop below today's low or some other point. It's hard to say what can work.
I don't have a strong conviction here, so I am going to wait for more information, or data.
TheStreet Ratings team rates TABLEAU SOFTWARE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate TABLEAU SOFTWARE INC (DATA) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 314.9% when compared to the same quarter one year ago, falling from -$4.57 million to -$18.98 million.
- 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. Compared to other companies in the Software industry and the overall market, TABLEAU SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- TABLEAU SOFTWARE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TABLEAU SOFTWARE INC reported lower earnings of $0.04 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus $0.04).
- The gross profit margin for TABLEAU SOFTWARE INC is currently very high, coming in at 92.39%. Regardless of DATA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DATA's net profit margin of -12.66% significantly underperformed when compared to the industry average.
- After a year of stock price fluctuations, the net result is that DATA's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
- You can view the full analysis from the report here: DATA
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.