EPAM Systems (EPAM) 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 EPAM Systems ( EPAM) 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 EPAM Systems as such a stock due to the following factors:

  • EPAM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.5 million.
  • EPAM has traded 567,967 shares today.
  • EPAM traded in a range 212.7% of the normal price range with a price range of $2.78.
  • EPAM traded above its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 EPAM:

EPAM Systems, Inc. provides software engineering solutions and technology services worldwide. EPAM has a PE ratio of 26.7. Currently there are 4 analysts that rate EPAM Systems a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for EPAM Systems has been 539,700 shares per day over the past 30 days. EPAM Systems has a market cap of $1.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.89 and a short float of 6.3% with 1.59 days to cover. Shares are down 5.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EPAM Systems as a buy. 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, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 25.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EPAM 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 5.83, which clearly demonstrates the ability to cover short-term cash needs.
  • EPAM SYSTEMS INC has improved earnings per share by 18.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EPAM SYSTEMS INC increased its bottom line by earning $1.28 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.28).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $15.00 million to $18.76 million.
  • Net operating cash flow has increased to $46.43 million or 29.84% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.26%.

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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