Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Netflix ( NFLX) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Netflix as such a stock due to the following factors:
- NFLX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $814.9 million.
- NFLX has a PE ratio of 388.0.
- NFLX is currently in the upper 30% of its 1-year range.
- NFLX is in the upper 25% of its 20-day range.
- NFLX is in the upper 35% of its 5-day range.
- NFLX is currently trading above yesterday's high.
- NFLX has experienced a gap between today's open and yesterday's close of 1.9%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills. EXCLUSIVE OFFER: Get the inside scoop on opportunities in NFLX with the Ticky from Trade-Ideas. See the FREE profile for NFLX NOW at Trade-Ideas More details on NFLX: Netflix, Inc. provides Internet television network service that enables subscribers to stream TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. NFLX has a PE ratio of 388.0. Currently there are 4 analysts that rate Netflix a buy, 5 analysts rate it a sell, and 17 rate it a hold. The average volume for Netflix has been 3.1 million shares per day over the past 30 days. Netflix has a market cap of $18.1 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.91 and a short float of 19.3% with 3.22 days to cover. Shares are up 231% year to date as of the close of trading on Friday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Netflix as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, premium valuation and generally higher debt management risk. Highlights from the ratings report include:
- NFLX's revenue growth has slightly outpaced the industry average of 17.8%. Since the same quarter one year prior, revenues rose by 20.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 80.03%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 2.75% is above that of the industry average.
- NETFLIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NETFLIX INC reported lower earnings of $0.29 versus $4.17 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $0.29).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Netflix Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.