Ellie Mae (ELLI) In A Perilous Reversal

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 Ellie Mae ( ELLI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ellie Mae as such a stock due to the following factors:

  • ELLI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.6 million.
  • ELLI has traded 115,958 shares today.
  • ELLI is down 3.5% today.
  • ELLI was up 14.2% yesterday.

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More details on ELLI:

Ellie Mae, Inc. and its subsidiaries provide business automation software for the mortgage industry in the United States. ELLI has a PE ratio of 45.2. Currently there are 5 analysts that rate Ellie Mae a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ellie Mae has been 621,100 shares per day over the past 30 days. Ellie Mae has a market cap of $646.4 million and is part of the technology sector and computer software & services industry. The stock has a beta of -0.22 and a short float of 11.3% with 1.56 days to cover. Shares are down 15.3% year to date as of the close of trading on Tuesday.

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 Ellie Mae as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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:
  • The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
  • ELLI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.43, which clearly demonstrates the ability to cover short-term cash needs.
  • ELLIE MAE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ELLIE MAE INC increased its bottom line by earning $0.76 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.76).
  • 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 50.8% when compared to the same quarter one year ago, falling from $6.83 million to $3.36 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, ELLIE MAE INC's return on equity is below 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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