Barbarian At The Gate: Tenaris (TS)

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 Tenaris ( TS) 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 Tenaris as such a stock due to the following factors:

  • TS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.2 million.
  • TS has traded 879,689 shares today.
  • TS traded in a range 216.6% of the normal price range with a price range of $1.52.
  • TS 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.

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More details on TS:

Tenaris S.A., through its subsidiaries, engages in the steel pipe manufacturing and distribution activities. The stock currently has a dividend yield of 2%. TS has a PE ratio of 14.6. Currently there are 2 analysts that rate Tenaris a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Tenaris has been 852,600 shares per day over the past 30 days. Tenaris has a market cap of $24.8 billion and is part of the industrial goods sector and industrial industry. Shares are down 5.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tenaris as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • TS's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TS has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 52.27% to $753.17 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 30.58%.
  • 41.70% is the gross profit margin for TENARIS SA which we consider to be strong. 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 12.42% trails the industry average.
  • TS, with its decline in revenue, underperformed when compared the industry average of 9.2%. Since the same quarter one year prior, revenues slightly dropped by 9.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • TENARIS SA's earnings per share declined by 30.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TENARIS SA increased its bottom line by earning $2.86 versus $2.26 in the prior year. For the next year, the market is expecting a contraction of 8.4% in earnings ($2.62 versus $2.86).

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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