Proofpoint (PFPT) Showing Signs Of A Dead Cat Bounce 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 Proofpoint ( PFPT) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Proofpoint as such a stock due to the following factors:

  • PFPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.5 million.
  • PFPT has traded 102,839 shares today.
  • PFPT is up 3.6% today.
  • PFPT was down 5.3% yesterday.

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More details on PFPT:

Proofpoint, Inc. provides threat protection, regulatory compliance, archiving and governance, and secure communication solutions worldwide. Currently there are 10 analysts that rate Proofpoint a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Proofpoint has been 460,200 shares per day over the past 30 days. Proofpoint has a market cap of $1.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.49 and a short float of 7.6% with 8.65 days to cover. Shares are up 9.8% 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 Proofpoint as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Software industry. The net income has significantly decreased by 632.4% when compared to the same quarter one year ago, falling from -$2.07 million to -$15.13 million.
  • 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 Software industry and the overall market, PROOFPOINT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$6.94 million or 841.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 2.31 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, PFPT has managed to keep a strong quick ratio of 2.01, which demonstrates the ability to cover short-term cash needs.
  • PROOFPOINT 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROOFPOINT INC reported poor results of -$0.78 versus -$0.66 in the prior year. This year, the market expects an improvement in earnings (-$0.40 versus -$0.78).

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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