Water-Logged And Getting Wetter: Teradata (TDC)

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 Teradata ( TDC) 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 Teradata as such a stock due to the following factors:

  • TDC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.9 million.
  • TDC has traded 1.9 million shares today.
  • TDC traded in a range 252.3% of the normal price range with a price range of $2.12.
  • TDC traded below its daily resistance level (quality: 189 days, meaning that the stock is crossing a resistance level set by the last 189 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 TDC:

Teradata Corporation provides analytic data platforms, marketing and analytic applications, and related services in the United States and internationally. TDC has a PE ratio of 19.1. Currently there are 3 analysts that rate Teradata a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for Teradata has been 1.5 million shares per day over the past 30 days. Teradata has a market cap of $6.5 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.05 and a short float of 15% with 18.10 days to cover. Shares are up 2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Teradata as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • TERADATA CORP has improved earnings per share by 13.2% 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, TERADATA CORP increased its bottom line by earning $2.34 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($2.55 versus $2.34).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $112.00 million to $118.00 million.
  • 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 IT Services industry and the overall market on the basis of return on equity, TERADATA CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for TERADATA CORP is rather high; currently it is at 61.24%. Regardless of TDC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TDC's net profit margin of 15.50% compares favorably to the industry average.
  • In its most recent trading session, TDC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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