TripAdvisor (TRIP) Marked As A Barbarian At The Gate

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 TripAdvisor ( TRIP) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified TripAdvisor as such a stock due to the following factors:

  • TRIP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $105.9 million.
  • TRIP has traded 549,913 shares today.
  • TRIP traded in a range 212.9% of the normal price range with a price range of $2.76.
  • TRIP traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on TRIP:

TripAdvisor, Inc. operates as an online travel company. The company operates through two segments, Hotel and Other. TRIP has a PE ratio of 5. Currently there are 5 analysts that rate TripAdvisor a buy, 2 analysts rate it a sell, and 15 rate it a hold.

The average volume for TripAdvisor has been 1.6 million shares per day over the past 30 days. TripAdvisor has a market cap of $9.9 billion and is part of the technology sector and internet industry. The stock has a beta of 3.10 and a short float of 11.9% with 8.81 days to cover. Shares are up 2.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TripAdvisor as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 18.9%. Since the same quarter one year prior, revenues rose by 29.2%. 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.
  • TRIP's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TRIP has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for TRIPADVISOR INC is currently very high, coming in at 96.42%. Regardless of TRIP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TRIP's net profit margin of 17.35% significantly outperformed against the industry.
  • TRIPADVISOR INC's earnings per share declined by 8.5% 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, TRIPADVISOR INC increased its bottom line by earning $1.56 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.56).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Internet & Catalog Retail industry average. The net income has decreased by 7.3% when compared to the same quarter one year ago, dropping from $68.00 million to $63.00 million.

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