Pandora Media (P) Marked As A Barbarian At The Gate

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 Pandora Media ( P) 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 Pandora Media as such a stock due to the following factors:

  • P has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $145.2 million.
  • P has traded 8.9 million shares today.
  • P traded in a range 260.2% of the normal price range with a price range of $2.15.
  • P traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 P:

Pandora Media, Inc. provides Internet radio services in the United States. The company allows listeners to create up to 100 personalized stations to access free music and comedy, as well as offers Pandora One, a paid subscription service to listeners. Currently there are 18 analysts that rate Pandora Media a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Pandora Media has been 6.6 million shares per day over the past 30 days. Pandora Media has a market cap of $3.9 billion and is part of the services sector and media industry. The stock has a beta of 0.76 and a short float of 14.4% with 2.82 days to cover. Shares are down 30.6% year-to-date as of the close of trading on Thursday.

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 Pandora Media as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

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 Internet Software & Services industry. The net income has decreased by 19.1% when compared to the same quarter one year ago, dropping from -$1.70 million to -$2.03 million.
  • 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. Compared to other companies in the Internet Software & Services industry and the overall market, PANDORA MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • P's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.04%, which is also worse than the performance of the S&P 500 Index. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • PANDORA MEDIA INC reported flat earnings per share in the most recent quarter. 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, PANDORA MEDIA INC reported poor results of -$0.30 versus -$0.19 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$0.30).
  • Net operating cash flow has increased to $5.05 million or 22.57% when compared to the same quarter last year. Despite an increase in cash flow, PANDORA MEDIA INC's average is still marginally south of the industry average growth rate of 25.25%.

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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