Qualys (QLYS) Is Today's Perilous Reversal Stock

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 Qualys ( QLYS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Qualys as such a stock due to the following factors:

  • QLYS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.7 million.
  • QLYS has traded 350,405 shares today.
  • QLYS is down 3.4% today.
  • QLYS was up 6.5% yesterday.

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More details on QLYS:

Qualys, Inc. provides cloud security and compliance solutions to enterprises, government entities, and small and medium-sized businesses in the United States and internationally. QLYS has a PE ratio of 155.6. Currently there are 3 analysts that rate Qualys a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Qualys has been 230,300 shares per day over the past 30 days. Qualys has a market cap of $1.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of -1.50 and a short float of 4.2% with 2.25 days to cover. Shares are up 50.6% 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 Qualys as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 145.1% when compared to the same quarter one year prior, rising from $1.31 million to $3.21 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 26.8%. Since the same quarter one year prior, revenues rose by 23.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 56.88% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, QUALYS INC'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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