Shutterfly (SFLY) 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 Shutterfly ( SFLY) 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 Shutterfly as such a stock due to the following factors:

  • SFLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.0 million.
  • SFLY has traded 236,048 shares today.
  • SFLY traded in a range 390% of the normal price range with a price range of $5.25.
  • SFLY traded above its daily resistance level (quality: 172 days, meaning that the stock is crossing a resistance level set by the last 172 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 SFLY:

Shutterfly, Inc. is engaged in the manufacture and retail of digital personalized products and services in the United States. Currently there are 6 analysts that rate Shutterfly a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Shutterfly has been 735,500 shares per day over the past 30 days. Shutterfly has a market cap of $1.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.25 and a short float of 16.5% with 6.87 days to cover. Shares are down 2.1% year-to-date as of the close of trading on Tuesday.

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 Shutterfly as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • SHUTTERFLY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SHUTTERFLY INC reported lower earnings of $0.19 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 173.7% in earnings (-$0.14 versus $0.19).
  • 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 Internet & Catalog Retail industry. The net income has significantly decreased by 129.0% when compared to the same quarter one year ago, falling from -$11.81 million to -$27.05 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, SHUTTERFLY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of SHUTTERFLY INC has not done very well: it is down 9.05% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Despite currently having a low debt-to-equity ratio of 0.34, 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 3.36 is very high and demonstrates very strong liquidity.

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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