Tivo (TIVO) 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 Tivo ( TIVO) 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 Tivo as such a stock due to the following factors:

  • TIVO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.0 million.
  • TIVO has traded 807,084 shares today.
  • TIVO traded in a range 209.6% of the normal price range with a price range of $0.59.
  • TIVO traded above its daily resistance level (quality: 37 days, meaning that the stock is crossing a resistance level set by the last 37 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 TIVO:

TiVo Inc., together with its subsidiaries, provides software and service technology that enables the distribution of video content on digital video recorders (DVRs), non-DVR set-top boxes (STB), computers, smartphones, and tablets in the United States and internationally. TIVO has a PE ratio of 7.0. Currently there are 6 analysts that rate Tivo a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Tivo has been 2.2 million shares per day over the past 30 days. Tivo has a market cap of $1.6 billion and is part of the services sector and media industry. The stock has a beta of 1.39 and a short float of 2.9% with 2.35 days to cover. Shares are down 1.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tivo as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 42.9%. 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.
  • 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 Software industry and the overall market, TIVO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for TIVO INC is rather high; currently it is at 59.57%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TIVO's net profit margin of 10.64% significantly trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.22 is very high and demonstrates very strong liquidity.

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