Trade-Ideas LLC identified

Nuance Communications

(

NUAN

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Nuance Communications as such a stock due to the following factors:

  • NUAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.5 million.
  • NUAN has traded 929,283 shares today.
  • NUAN traded in a range 252.9% of the normal price range with a price range of $0.79.
  • NUAN traded below its daily resistance level (quality: 41 days, meaning that the stock is crossing a resistance level set by the last 41 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on NUAN:

Nuance Communications, Inc. provides voice and language solutions for businesses and consumers worldwide. It operates through four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging. Currently there are 5 analysts that rate Nuance Communications a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Nuance Communications has been 2.5 million shares per day over the past 30 days. Nuance has a market cap of $4.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.31 and a short float of 4.6% with 4.95 days to cover. Shares are down 19.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Nuance Communications as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • NUAN's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NUANCE COMMUNICATIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NUANCE COMMUNICATIONS INC continued to lose money by earning -$0.37 versus -$0.47 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus -$0.37).
  • The gross profit margin for NUANCE COMMUNICATIONS INC is rather high; currently it is at 63.57%. Regardless of NUAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NUAN's net profit margin of -1.47% significantly underperformed when compared to the industry average.
  • NUAN has underperformed the S&P 500 Index, declining 11.37% from its price level of one year ago. 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.
  • The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NUAN maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.

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