Trade-Ideas LLC identified

CoStar Group

(

CSGP

) 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 CoStar Group as such a stock due to the following factors:

  • CSGP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.8 million.
  • CSGP has traded 163,463 shares today.
  • CSGP traded in a range 217.5% of the normal price range with a price range of $16.75.
  • CSGP traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 CSGP:

CoStar Group, Inc. provides information, analytics, and online marketplaces services to the commercial real estate industry in the United States, Canada, the United Kingdom, and France. Currently there are 7 analysts that rate CoStar Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for CoStar Group has been 188,700 shares per day over the past 30 days. CoStar Group has a market cap of $5.6 billion and is part of the financial sector and real estate industry. The stock has a beta of 1.80 and a short float of 4.5% with 9.23 days to cover. Shares are down 16.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CoStar Group as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • CSGP's revenue growth has slightly outpaced the industry average of 21.7%. Since the same quarter one year prior, revenues rose by 23.5%. 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.
  • Although CSGP's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.62, which clearly demonstrates the ability to cover short-term cash needs.
  • COSTAR GROUP 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COSTAR GROUP INC increased its bottom line by earning $1.45 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.45).
  • 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 Internet Software & Services industry. The net income has significantly decreased by 141.4% when compared to the same quarter one year ago, falling from $12.96 million to -$5.36 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 Internet Software & Services industry and the overall market, COSTAR GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.

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