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 Starbucks Corporation ( SBUX) 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 Starbucks Corporation as such a stock due to the following factors:
- SBUX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $276.8 million.
- SBUX has traded 314,924 shares today.
- SBUX traded in a range 216.2% of the normal price range with a price range of $2.20.
- SBUX traded below its daily resistance level (quality: 55 days, meaning that the stock is crossing a resistance level set by the last 55 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in SBUX with the Ticky from Trade-Ideas. See the FREE profile for SBUX NOW at Trade-Ideas More details on SBUX: Starbucks Corporation operates as a roaster, marketer, and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single serve products, and juices and bottled water. The stock currently has a dividend yield of 1.3%. SBUX has a PE ratio of 7994.0. Currently there are 17 analysts that rate Starbucks Corporation a buy, no analysts rate it a sell, and 7 rate it a hold. The average volume for Starbucks Corporation has been 4.2 million shares per day over the past 30 days. Starbucks has a market cap of $60.2 billion and is part of the services sector and leisure industry. The stock has a beta of 0.74 and a short float of 1.1% with 2.01 days to cover. Shares are up 48.7% year-to-date as of the close of trading on Monday. 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 Starbucks Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 12.8%. 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.
- Compared to its closing price of one year ago, SBUX's share price has jumped by 56.96%, exceeding the performance of the broader market during that same time frame. Although SBUX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- SBUX's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 443.2% when compared to the same quarter one year ago, falling from $359.00 million to -$1,232.00 million.
- 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. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARBUCKS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Starbucks Corporation 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.