Water-Logged And Getting Wetter: CBS (CBS)

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

  • CBS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $212.6 million.
  • CBS has traded 2.2 million shares today.
  • CBS traded in a range 305.3% of the normal price range with a price range of $3.08.
  • CBS traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 CBS:

CBS Corporation operates as a mass media company worldwide. It operates through four segments: Entertainment, Cable Networks, Publishing, and Local Broadcasting. The stock currently has a dividend yield of 1%. CBS has a PE ratio of 25.4. Currently there are 16 analysts that rate CBS a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for CBS has been 4.9 million shares per day over the past 30 days. CBS has a market cap of $28.1 billion and is part of the services sector and media industry. The stock has a beta of 1.58 and a short float of 2.7% with 4.16 days to cover. Shares are up 10.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CBS as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Media industry and the overall market, CBS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 78.48% to $987.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 41.37%.
  • 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • CBS CORP has improved earnings per share by 11.6% in the most recent quarter compared to 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, CBS CORP reported lower earnings of $2.39 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($3.58 versus $2.39).

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