Watch Out: Barbarians At The Gate For Starz (STRZA)

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 Starz ( STRZA) 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 Starz as such a stock due to the following factors:

  • STRZA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.5 million.
  • STRZA has traded 1.4 million shares today.
  • STRZA traded in a range 331.6% of the normal price range with a price range of $2.62.
  • STRZA traded above its daily resistance level (quality: 527 days, meaning that the stock is crossing a resistance level set by the last 527 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in STRZA with the Ticky from Trade-Ideas. See the FREE profile for STRZA NOW at Trade-Ideas

More details on STRZA:

Starz operates as an integrated media and entertainment company. The company operates through Starz Networks, Starz Distribution, and Starz Animation segments. STRZA has a PE ratio of 14.0. Currently there is 1 analyst that rates Starz a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Starz has been 898,200 shares per day over the past 30 days. Starz has a market cap of $3.1 billion and is part of the services sector and media industry. The stock has a beta of 0.99 and a short float of 7.1% with 8.54 days to cover. Shares are up 13.6% 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 Starz as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • STARZ has improved earnings per share by 18.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STARZ increased its bottom line by earning $2.04 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($2.22 versus $2.04).
  • STRZA, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio is very high at 22.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, STRZA's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has declined marginally to $47.20 million or 3.55% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

What Angela Merkel's Uncertain Political Future Means for Greece's Debt Woes

What Angela Merkel's Uncertain Political Future Means for Greece's Debt Woes

Dow Tumbles, Stocks Slide on Renewed Trade War Concerns

Dow Tumbles, Stocks Slide on Renewed Trade War Concerns

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

Goldman Is Bullish on Oil, Sees Demand Outweighing Inventory Concern

Goldman Is Bullish on Oil, Sees Demand Outweighing Inventory Concern