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 $12.4 million.
  • ROVI has traded 96,288 shares today.
  • ROVI is down 14.8% today.
  • ROVI was up 5.2% 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.

TST Recommends

The average volume for Rovi has been 1.6 million shares per day over the past 30 days. Rovi has a market cap of $956.9 million and is part of the technology sector and computer software & services industry. The stock has a beta of 1.53 and a short float of 15% with 10.39 days to cover. Shares are down 52.5% year-to-date as of the close of trading on Tuesday.

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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 disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • 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.
  • Net operating cash flow has decreased to $39.48 million or 31.25% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • ROVI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.76%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The gross profit margin for ROVI CORP is currently very high, coming in at 79.92%. 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 2.61% is significantly lower than the industry average.
  • Despite the weak revenue results, ROVI has outperformed against the industry average of 18.9%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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