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 Riverbed Technology ( RVBD) 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 Riverbed Technology as such a stock due to the following factors:
- RVBD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $50.6 million.
- RVBD has traded 2.5 million shares today.
- RVBD traded in a range 237% of the normal price range with a price range of $0.82.
- RVBD traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in RVBD with the Ticky from Trade-Ideas. See the FREE profile for RVBD NOW at Trade-Ideas More details on RVBD: Riverbed Technology, Inc. provides solutions to the fundamental problems associated with information technology (IT) performance across wide area networks (WANs) in the United States and internationally. RVBD has a PE ratio of 510.0. Currently there are 8 analysts that rate Riverbed Technology a buy, 2 analysts rate it a sell, and 16 rate it a hold. The average volume for Riverbed Technology has been 3.1 million shares per day over the past 30 days. Riverbed Technology has a market cap of $2.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.45 and a short float of 6.7% with 3.22 days to cover. Shares are down 22.4% year to date as of the close of trading on Thursday. 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 Riverbed Technology as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 29.9%. Since the same quarter one year prior, revenues rose by 25.9%. 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.
- The gross profit margin for RIVERBED TECHNOLOGY INC is currently very high, coming in at 84.42%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.61% is in-line with the industry average.
- Net operating cash flow has increased to $37.30 million or 23.14% when compared to the same quarter last year. Despite an increase in cash flow of 23.14%, RIVERBED TECHNOLOGY INC is still growing at a significantly lower rate than the industry average of 89.47%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Communications Equipment industry and the overall market, RIVERBED TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.51%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 190.90% compared to 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, RVBD is still more expensive than most of the other companies in its industry.
- You can view the full Riverbed Technology 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.