Liberty Global (LBTYK) 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.

Trade-Ideas LLC identified Liberty Global ( LBTYK) 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 Liberty Global as such a stock due to the following factors:

  • LBTYK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $113.6 million.
  • LBTYK has traded 4.9 million shares today.
  • LBTYK traded in a range 249.3% of the normal price range with a price range of $1.98.
  • LBTYK traded below its daily resistance level (quality: 15 days, meaning that the stock is crossing a resistance level set by the last 15 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 LBTYK:

Liberty Global plc, together with its subsidiaries, provides video, broadband Internet, fixed-line telephony, and mobile services in Europe, Chile, Puerto Rico, and internationally.

The average volume for Liberty Global has been 2.5 million shares per day over the past 30 days. Liberty Global has a market cap of $31.4 billion and is part of the services sector and media industry. Shares are up 4.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Liberty Global as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, LBTYK's share price has jumped by 31.27%, 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.
  • 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 3.3%. 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.
  • Net operating cash flow has slightly increased to $1,542.70 million or 5.28% when compared to the same quarter last year. Despite an increase in cash flow, LIBERTY GLOBAL PLC's cash flow growth rate is still lower than the industry average growth rate of 41.37%.
  • 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 Media industry. The net income has significantly decreased by 331.8% when compared to the same quarter one year ago, falling from -$121.20 million to -$523.40 million.
  • Although LBTYK's debt-to-equity ratio of 3.14 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.29, which clearly demonstrates the inability to cover short-term cash needs.

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