Dealertrack Technologies (TRAK) Showing Unusual Social Activity Today

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 Dealertrack Technologies ( TRAK) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Dealertrack Technologies as such a stock due to the following factors:

  • TRAK has 11x the normal benchmarked social activity for this time of the day compared to its average of 3.42 mentions/day.
  • TRAK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $207.5 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on TRAK:

Dealertrack Technologies, Inc. provides Web-based software solutions and services to the automotive retail industry in the United States and Canada. Currently there are 5 analysts that rate Dealertrack Technologies a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Dealertrack Technologies has been 409,300 shares per day over the past 30 days. Dealertrack has a market cap of $2.2 billion and is part of the technology sector and internet industry. The stock has a beta of 1.37 and a short float of 13.2% with 2.15 days to cover. Shares are up 42.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dealertrack Technologies as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • TRAK's very impressive revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues leaped by 59.1%. 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 significantly increased by 74.96% to -$23.25 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 41.44%.
  • The gross profit margin for DEALERTRACK TECHNOLOGIES INC is rather high; currently it is at 58.71%. Regardless of TRAK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TRAK's net profit margin of -8.99% significantly underperformed when compared to the industry average.
  • 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 95.2% when compared to the same quarter one year ago, falling from -$11.64 million to -$22.73 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, DEALERTRACK TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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