Ellie Mae (ELLI) In A Perilous Reversal

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.

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

  • ELLI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.8 million.
  • ELLI has traded 163,481 shares today.
  • ELLI is down 3% today.
  • ELLI was up 21.6% yesterday.

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More details on ELLI:

Ellie Mae, Inc. provides on-demand software solutions and services for the residential mortgage industry in the United States. Its mortgage management solution offers a system of record that allows banks, credit unions, and mortgage lenders to originate and fund mortgages. ELLI has a PE ratio of 110.0. Currently there are 5 analysts that rate Ellie Mae a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Ellie Mae has been 301,700 shares per day over the past 30 days. Ellie Mae has a market cap of $1.6 billion and is part of the technology sector and computer software & services industry. Shares are up 65.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ellie Mae as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • ELLI's very impressive revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues leaped by 68.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ELLI's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.57, which clearly demonstrates the ability to cover short-term cash needs.
  • ELLIE MAE INC reported significant earnings per share improvement 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. During the past fiscal year, ELLIE MAE INC increased its bottom line by earning $0.50 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus $0.50).
  • 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 358.3% when compared to the same quarter one year prior, rising from $0.78 million to $3.58 million.
  • Net operating cash flow has significantly increased by 415.59% to $10.95 million when compared to the same quarter last year. In addition, ELLIE MAE INC has also vastly surpassed the industry average cash flow growth rate of -14.60%.

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