SBA Communications (SBAC) 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 SBA Communications ( SBAC) 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 SBA Communications as such a stock due to the following factors:

  • SBAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.7 million.
  • SBAC has traded 891,318 shares today.
  • SBAC traded in a range 210.2% of the normal price range with a price range of $3.77.
  • SBAC traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 SBAC:

SBA Communications Corporation owns and operates wireless communications tower structures, rooftops, and other structures that support antennas used for wireless communications in the United States and its territories, as well as in Canada, Central America, and South America. Currently there are 10 analysts that rate SBA Communications a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for SBA Communications has been 1.1 million shares per day over the past 30 days. SBA has a market cap of $15.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.33 and a short float of 4.2% with 6.04 days to cover. Shares are up 35.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SBAC's share price has jumped by 40.48%, exceeding the performance of the broader market during that same time frame. 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 revenue growth significantly trails the industry average of 58.9%. Since the same quarter one year prior, revenues rose by 18.4%. 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.
  • The gross profit margin for SBA COMMUNICATIONS CORP is currently very high, coming in at 71.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.22% is in-line with the industry average.
  • SBA COMMUNICATIONS CORP 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, SBA COMMUNICATIONS CORP continued to lose money by earning -$0.45 versus -$1.50 in the prior year. This year, the market expects an improvement in earnings (-$0.17 versus -$0.45).
  • 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 177.2% when compared to the same quarter one year ago, falling from $21.53 million to -$16.62 million.

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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