Water-Logged And Getting Wetter: Discovery Communications (DISCA)
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 Discovery Communications as such a stock due to the following factors:
- DISCA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.7 million.
- DISCA has traded 2.6 million shares today.
- DISCA traded in a range 235.6% of the normal price range with a price range of $2.11.
- DISCA traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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 DISCA:
Discovery Communications, Inc. operates as a media company. The company operates through U.S. Networks; International Networks; and Education and Other segments. DISCA has a PE ratio of 19. Currently there are 3 analysts that rate Discovery Communications a buy, 1 analyst rates it a sell, and 14 rate it a hold.
The average volume for Discovery Communications has been 3.5 million shares per day over the past 30 days. Discovery has a market cap of $4.5 billion and is part of the services sector and media industry. The stock has a beta of 1.75 and a short float of 15.8% with 7.70 days to cover. Shares are down 9.8% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Discovery Communications as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Even though the current debt-to-equity ratio is 1.31, it is still below the industry average, suggesting that this level of debt is acceptable within the Media industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.10 is sturdy.
- The share price of DISCOVERY COMMUNICATIONS INC has not done very well: it is down 20.67% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Media industry average. The net income has decreased by 24.5% when compared to the same quarter one year ago, dropping from $379.00 million to $286.00 million.
- You can view the full Discovery Communications Ratings Report.
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