Watch Out: Barbarians At The Gate For Vantiv (VNTV)

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 Vantiv ( VNTV) 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 Vantiv as such a stock due to the following factors:

  • VNTV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.9 million.
  • VNTV has traded 1.1 million shares today.
  • VNTV traded in a range 236.5% of the normal price range with a price range of $1.12.
  • VNTV traded above its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 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 VNTV:

Vantiv, Inc. provides electronic integrated payment processing services in the United States. It operates in two segments, Merchant Services and Financial Institution Services. VNTV has a PE ratio of 46.7. Currently there are 8 analysts that rate Vantiv a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Vantiv has been 1.3 million shares per day over the past 30 days. Vantiv has a market cap of $4.6 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.44 and a short float of 6.2% with 2.13 days to cover. Shares are down 4.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vantiv as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. 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:
  • The revenue growth came in higher than the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 17.2%. 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 increased to $171.76 million or 20.47% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.75%.
  • VANTIV 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VANTIV INC increased its bottom line by earning $0.88 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $0.88).
  • The debt-to-equity ratio is very high at 4.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, VNTV has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the IT Services industry and the overall market, VANTIV INC's return on equity is significantly below that of the industry average and is below that of 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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