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 TIBCO Software ( TIBX) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified TIBCO Software as such a stock due to the following factors:
- TIBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $96.0 million.
- TIBX has traded 125,971 shares today.
- TIBX is trading at 10.43 times the normal volume for the stock at this time of day.
- TIBX crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend. EXCLUSIVE OFFER: Get the inside scoop on opportunities in TIBX with the Ticky from Trade-Ideas. See the FREE profile for TIBX NOW at Trade-Ideas More details on TIBX: TIBCO Software Inc. provides middleware and infrastructure software worldwide. It offers products in the areas of service-oriented architecture (SOA) and core infrastructure; business optimization; and process automation and collaboration. TIBX has a PE ratio of 21.0. Currently there are 8 analysts that rate TIBCO Software a buy, no analysts rate it a sell, and 8 rate it a hold. The average volume for TIBCO Software has been 2.5 million shares per day over the past 30 days. TIBCO Software has a market cap of $3.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.95 and a short float of 1.8% with 0.58 days to cover. Shares are up 4.4% 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 TIBCO Software as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- TIBX's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 6.4%. 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.
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TIBX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.29 is high and demonstrates strong liquidity.
- The gross profit margin for TIBCO SOFTWARE INC is currently very high, coming in at 77.13%. Regardless of TIBX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.12% trails the industry average.
- TIBCO SOFTWARE INC's earnings per share declined by 6.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TIBCO SOFTWARE INC reported lower earnings of $0.51 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.51).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full TIBCO Software 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.