Liberty Global (LBTYK) Spotted As Roof Leaker Today

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 Liberty Global ( LBTYK) 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 Liberty Global as such a stock due to the following factors:

  • LBTYK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.3 million.
  • LBTYK has traded 2.5 million shares today.
  • LBTYK is trading at 2.08 times the normal volume for the stock at this time of day.
  • LBTYK 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.

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More details on LBTYK:

Liberty Global plc, together with its subsidiaries, provides video, broadband Internet, fixed-line telephony, and mobile services in Europe, Chile, Puerto Rico, and internationally.

The average volume for Liberty Global has been 3.3 million shares per day over the past 30 days. Liberty Global has a market cap of $23.2 billion and is part of the services sector and media industry. The stock has a beta of 1.35 and a short float of 12.2% with 15.19 days to cover. Shares are down 0.6% year-to-date as of the close of trading on Friday.

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 Liberty Global as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • LBTYK's very impressive revenue growth greatly exceeded the industry average of 12.4%. Since the same quarter one year prior, revenues leaped by 50.5%. 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.
  • Net operating cash flow has significantly increased by 102.44% to $1,596.30 million when compared to the same quarter last year. In addition, LIBERTY GLOBAL PLC has also vastly surpassed the industry average cash flow growth rate of 14.05%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • Although LBTYK's debt-to-equity ratio of 3.72 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.28, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Media industry and the overall market, LIBERTY GLOBAL PLC's return on equity significantly trails that of both the industry average and the S&P 500.

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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