Pre-Market Laggard: LinkedIn (LNKD)

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 LinkedIn ( LNKD) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified LinkedIn as such a stock due to the following factors:

  • LNKD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $550.3 million.
  • LNKD traded 24,287 shares today in the pre-market hours as of 8:50 AM.
  • LNKD is down 2.8% today from yesterday's close.

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More details on LNKD:

LinkedIn Corporation, together with its subsidiaries, operates an online professional network worldwide. Currently there are 19 analysts that rate LinkedIn a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for LinkedIn has been 1.7 million shares per day over the past 30 days. LinkedIn has a market cap of $21.7 billion and is part of the technology sector and internet industry. The stock has a beta of 1.26 and a short float of 4.8% with 1.61 days to cover. Shares are down 12.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LinkedIn as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 34.8%. 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.
  • Compared to its closing price of one year ago, LNKD's share price has jumped by 33.61%, 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 currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.51 is very high and demonstrates very strong liquidity.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 216.4% when compared to the same quarter one year ago, falling from -$13.45 million to -$42.55 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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