Trade-Ideas LLC identified

Mellanox Technologies

(

MLNX

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

  • MLNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.6 million.
  • MLNX has traded 168,493 shares today.
  • MLNX is down 4.6% today.
  • MLNX was up 5.1% yesterday.

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More details on MLNX:

Mellanox Technologies, Ltd., a fabless semiconductor company, designs, manufactures, and sells interconnect products and solutions. MLNX has a PE ratio of 74. Currently there are 5 analysts that rate Mellanox Technologies a buy, no analysts rate it a sell, and 3 rate it a hold.

TheStreet Recommends

The average volume for Mellanox Technologies has been 685,100 shares per day over the past 30 days. Mellanox has a market cap of $1.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.35 and a short float of 6.8% with 5.17 days to cover. Shares are down 2.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Mellanox Technologies 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 compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • MLNX's very impressive revenue growth greatly exceeded the industry average of 10.5%. Since the same quarter one year prior, revenues leaped by 58.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MLNX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.79, which clearly demonstrates the ability to cover short-term cash needs.
  • MELLANOX TECHNOLOGIES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, MELLANOX TECHNOLOGIES LTD's EPS of -$0.54 remained unchanged from the prior years' EPS of -$0.54. This year, the market expects an improvement in earnings ($2.73 versus -$0.54).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MELLANOX TECHNOLOGIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, MLNX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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