Trade-Ideas LLC identified

NetSuite

(

N

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified NetSuite as such a stock due to the following factors:

  • N has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $109.0 million.
  • N has traded 703,022 shares today.
  • N traded in a range 357.4% of the normal price range with a price range of $11.85.
  • N traded above its daily resistance level (quality: 342 days, meaning that the stock is crossing a resistance level set by the last 342 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on N:

NetSuite Inc. provides cloud-based financials/enterprise resource planning (ERP) and omnichannel commerce software suites in the United States and internationally. N has a PE ratio of 596. Currently there are 7 analysts that rate NetSuite a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for NetSuite has been 836,200 shares per day over the past 30 days. NetSuite has a market cap of $6.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.12 and a short float of 17.3% with 5.05 days to cover. Shares are down 0.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates NetSuite as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 31.0% when compared to the same quarter one year ago, falling from -$22.71 million to -$29.75 million.
  • The share price of NETSUITE INC has not done very well: it is down 11.80% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • NETSUITE INC's earnings per share declined by 27.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NETSUITE INC reported poor results of -$1.58 versus -$1.31 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$1.58).
  • 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 Software industry and the overall market, NETSUITE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NETSUITE INC is currently very high, coming in at 73.20%. Regardless of N's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, N's net profit margin of -13.73% significantly underperformed when compared to the industry average.

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