Trade-Ideas LLC identified

Netflix

(

NFLX

) 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 $2.7 billion.
  • NFLX has traded 8.7 million shares today.
  • NFLX is up 3.3% today.
  • NFLX was down 6.8% yesterday.

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More details on NFLX:

Netflix, Inc., an Internet television network, engages in the Internet delivery of TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. The company operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. NFLX has a PE ratio of 261. Currently there are 15 analysts that rate Netflix a buy, 2 analysts rate it a sell, and 9 rate it a hold.

TST Recommends

The average volume for Netflix has been 18.2 million shares per day over the past 30 days. Netflix has a market cap of $41.8 billion and is part of the services sector and media industry. The stock has a beta of 1.44 and a short float of 13.5% with 1.84 days to cover. Shares are down 14.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Netflix as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, NFLX's share price has jumped by 75.04%, exceeding the performance of the broader market during that same time frame. Although NFLX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • NFLX's revenue growth trails the industry average of 37.3%. Since the same quarter one year prior, revenues rose by 22.8%. 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.
  • The gross profit margin for NETFLIX INC is currently very high, coming in at 86.11%. 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 2.36% trails the industry average.
  • NETFLIX INC's earnings per share declined by 48.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, NETFLIX INC reported lower earnings of $0.28 versus $0.62 in the prior year. For the next year, the market is expecting a contraction of 15.6% in earnings ($0.24 versus $0.28).
  • 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 & Catalog Retail industry. The net income has significantly decreased by 48.2% when compared to the same quarter one year ago, falling from $83.37 million to $43.18 million.

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