Watch Out: Barbarians At The Gate For Starz (STRZA)

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 Starz ( STRZA) 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 Starz as such a stock due to the following factors:

  • STRZA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.3 million.
  • STRZA has traded 563,528 shares today.
  • STRZA traded in a range 235.1% of the normal price range with a price range of $1.33.
  • STRZA traded above its daily resistance level (quality: 119 days, meaning that the stock is crossing a resistance level set by the last 119 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 STRZA:

Starz operates as an integrated media and entertainment company. The company operates through Starz Networks, Starz Distribution, and Starz Animation segments. STRZA has a PE ratio of 13.6. Currently there are 2 analysts that rate Starz a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Starz has been 957,400 shares per day over the past 30 days. Starz has a market cap of $3.0 billion and is part of the services sector and media industry. The stock has a beta of 1.27 and a short float of 5.4% with 8.16 days to cover. Shares are up 6.1% year-to-date as of the close of trading on Wednesday.

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 Starz as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • STARZ has improved earnings per share by 19.2% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STARZ increased its bottom line by earning $2.04 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($2.24 versus $2.04).
  • The revenue fell significantly faster than the industry average of 11.9%. Since the same quarter one year prior, revenues fell by 20.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio is very high at 14.50 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, STRZA maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to $18.70 million or 74.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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