New Lifetime High Reached: Proofpoint (PFPT)

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 Proofpoint ( PFPT) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Proofpoint as such a stock due to the following factors:

  • PFPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.5 million.
  • PFPT has traded 21,293 shares today.
  • PFPT is trading at a new lifetime high.

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More details on PFPT:

Proofpoint, Inc. provides threat protection, incident response, regulatory compliance, archiving, governance, eDiscovery, and secure communication solutions worldwide. Currently there are 11 analysts that rate Proofpoint a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Proofpoint has been 641,500 shares per day over the past 30 days. Proofpoint has a market cap of $2.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.00 and a short float of 14.9% with 5.55 days to cover. Shares are up 38.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Proofpoint as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Software industry. The net income has significantly decreased by 50.5% when compared to the same quarter one year ago, falling from -$14.40 million to -$21.67 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, PROOFPOINT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 3.43 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, PFPT's quick ratio is somewhat strong at 1.42, demonstrating the ability to handle short-term liquidity needs.
  • PROOFPOINT INC's earnings per share declined by 43.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROOFPOINT INC reported poor results of -$1.71 versus -$0.78 in the prior year. This year, the market expects an improvement in earnings (-$0.38 versus -$1.71).
  • The gross profit margin for PROOFPOINT INC is currently very high, coming in at 73.77%. Regardless of PFPT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PFPT's net profit margin of -37.52% significantly underperformed when compared to the industry average.

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