Trade-Ideas LLC identified

Rovi

(

ROVI

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Rovi as such a stock due to the following factors:

  • ROVI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.1 million.
  • ROVI has traded 246,386 shares today.
  • ROVI is down 3.2% today.
  • ROVI was up 11.7% yesterday.

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More details on ROVI:

Rovi Corporation provides integrated solutions for the discovery and personalization of digital entertainment to service providers and consumer electronics (CE) industry worldwide. Currently there are 3 analysts that rate Rovi a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Rovi has been 1.9 million shares per day over the past 30 days. Rovi has a market cap of $1.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.91 and a short float of 14.9% with 4.09 days to cover. Shares are down 21.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rovi as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • 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 162.5% when compared to the same quarter one year ago, falling from -$7.03 million to -$18.46 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, ROVI CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.04%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 214.28% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • ROVI CORP 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, ROVI CORP swung to a loss, reporting -$0.14 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus -$0.14).
  • The gross profit margin for ROVI CORP is currently very high, coming in at 78.58%. Regardless of ROVI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROVI's net profit margin of -16.06% significantly underperformed when compared to the industry average.

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