Water-Logged And Getting Wetter Stock Of The Day: Outerwall (OUTR)

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 Outerwall ( OUTR) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Outerwall as such a stock due to the following factors:

  • OUTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.1 million.
  • OUTR has traded 534,026 shares today.
  • OUTR traded in a range 217.9% of the normal price range with a price range of $4.19.
  • OUTR traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on OUTR:

Outerwall Inc., through its subsidiaries, provides automated retail solutions primarily in the United States, Canada, Puerto Rico, Ireland, and the United Kingdom. The stock currently has a dividend yield of 1.5%. OUTR has a PE ratio of 13. Currently there are 5 analysts that rate Outerwall a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Outerwall has been 470,400 shares per day over the past 30 days. Outerwall has a market cap of $1.5 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.02 and a short float of 47.3% with 18.39 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Outerwall as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 104.58% and other important driving factors, this stock has surged by 29.27% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OUTR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 53.6% when compared to the same quarter one year prior, rising from $23.18 million to $35.60 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • OUTERWALL INC reported significant earnings per share improvement 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, OUTERWALL INC reported lower earnings of $5.45 versus $7.39 in the prior year. This year, the market expects an improvement in earnings ($8.19 versus $5.45).
  • Net operating cash flow has increased to $106.07 million or 12.47% when compared to the same quarter last year. Despite an increase in cash flow, OUTERWALL INC's cash flow growth rate is still lower than the industry average growth rate of 29.97%.

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