Trade-Ideas LLC identified

Infinera

(

INFN

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

  • INFN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.4 million.
  • INFN has traded 5.1 million shares today.
  • INFN is up 3.2% today.
  • INFN was down 33.6% yesterday.

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More details on INFN:

Infinera Corporation provides optical transport networking equipment, software, and services worldwide. INFN has a PE ratio of 36. Currently there are 9 analysts that rate Infinera a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Infinera has been 2.5 million shares per day over the past 30 days. Infinera has a market cap of $1.8 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.15 and a short float of 11% with 2.33 days to cover. Shares are down 54.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Infinera 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 a generally disappointing performance in the stock itself, weak operating cash flow and unimpressive growth in net income.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 31.0%. 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.
  • INFN's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, INFN has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market on the basis of return on equity, INFINERA CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has decreased to $9.98 million or 49.70% 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.
  • Looking at the price performance of INFN's shares over the past 12 months, there is not much good news to report: the stock is down 44.22%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, INFN is still more expensive than most of the other companies in its industry.

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