Tim Participacoes (TSU) 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 Tim Participacoes ( TSU) 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 Tim Participacoes as such a stock due to the following factors:

  • TSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.8 million.
  • TSU has traded 4.5 million shares today.
  • TSU traded in a range 266.1% of the normal price range with a price range of $1.34.
  • TSU traded above its daily resistance level (quality: 51 days, meaning that the stock is crossing a resistance level set by the last 51 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 TSU:

TIM Participacoes S.A., through its subsidiaries, provides mobile telecommunication services in Brazil. The company offers mobile, fixed, and long distance telephony; data transmission; and broadband services. The stock currently has a dividend yield of 1.4%. TSU has a PE ratio of 1. Currently there are 4 analysts that rate Tim Participacoes a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Tim Participacoes has been 1.8 million shares per day over the past 30 days. Tim Participacoes has a market cap of $7.5 billion and is part of the technology sector and telecommunications industry. Shares are down 30% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tim Participacoes as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
  • 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 Wireless Telecommunication Services industry and the overall market on the basis of return on equity, TIM PARTICIPACOES SA has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.93%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 41.17% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • TIM PARTICIPACOES SA's earnings per share declined by 41.2% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TIM PARTICIPACOES SA reported lower earnings of $1.21 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings ($1.01 versus $1.21).

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