TripAdvisor (TRIP) Shows Signs Of Being Water-Logged And Getting Wetter

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 TripAdvisor ( TRIP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified TripAdvisor as such a stock due to the following factors:

  • TRIP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.4 million.
  • TRIP has traded 550,125 shares today.
  • TRIP traded in a range 220% of the normal price range with a price range of $4.85.
  • TRIP traded below its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on TRIP:

TripAdvisor, Inc. operates as an online travel company. TRIP has a PE ratio of 67.9. Currently there are 9 analysts that rate TripAdvisor a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for TripAdvisor has been 1.7 million shares per day over the past 30 days. TripAdvisor has a market cap of $12.8 billion and is part of the technology sector and internet industry. The stock has a beta of 1.74 and a short float of 16.3% with 7.94 days to cover. Shares are up 19.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TripAdvisor as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 30.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Internet & Catalog Retail industry average. The net income increased by 1.5% when compared to the same quarter one year prior, going from $66.99 million to $68.00 million.
  • 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. Despite the fact that TRIP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.13 is high and demonstrates strong liquidity.
  • 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, TRIPADVISOR INC's return on equity exceeds 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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