AU Optronics Corporation (AUO) Marked As A Barbarian At The Gate

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 AU Optronics Corporation ( AUO) 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 AU Optronics Corporation as such a stock due to the following factors:

  • AUO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.9 million.
  • AUO has traded 63,879 shares today.
  • AUO traded in a range 34880.9% of the normal price range with a price range of $29.27.
  • AUO traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 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 AUO:

AU Optronics Corp. engages in the design, development, manufacture, assembly, and marketing of thin film transistor liquid crystal displays and other flat panel displays. The company operates in two segments, Display and Solar. The stock currently has a dividend yield of 2.7%. Currently there is 1 analyst that rates AU Optronics Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for AU Optronics Corporation has been 1.0 million shares per day over the past 30 days. AU Optronics has a market cap of $2.8 billion and is part of the technology sector and electronics industry. Shares are down 29.8% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AU Optronics Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.19 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, AUO has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $440.48 million or 18.80% when compared to the same quarter last year. Despite a decrease in cash flow AU OPTRONICS CORP is still fairing well by exceeding its industry average cash flow growth rate of -39.45%.
  • AUO has underperformed the S&P 500 Index, declining 16.41% 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 gross profit margin for AU OPTRONICS CORP is rather low; currently it is at 24.04%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.27% trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, AU OPTRONICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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