Today's Dead Cat Bounce Stock: Netflix (NFLX)
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) 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 $1.5 billion.
- NFLX has traded 12.7 million shares today.
- NFLX is up 3% today.
- NFLX was down 13.1% yesterday.
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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 341. Currently there are 15 analysts that rate Netflix a buy, 3 analysts rate it a sell, and 8 rate it a hold.
The average volume for Netflix has been 11.9 million shares per day over the past 30 days. Netflix has a market cap of $42.3 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 1.98 days to cover. Shares are down 24.9% year-to-date as of the close of trading on Tuesday.
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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 largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- NFLX's revenue growth trails the industry average of 44.0%. Since the same quarter one year prior, revenues rose by 28.0%. 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 87.48%. 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 1.93% trails the industry average.
- The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.
- NFLX has underperformed the S&P 500 Index, declining 13.91% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- 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. 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.
- You can view the full Netflix Ratings Report.
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