Nielsen (NLSN) 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 Nielsen ( NLSN) 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 Nielsen as such a stock due to the following factors:

  • NLSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $97.9 million
  • NLSN has traded 1.2 million shares today
  • NLSN traded in a range 209.8% of the normal price range with a price range of $1.05
  • NLSN traded above its daily resistance level (quality: 119 days, meaning that the stock is crossing a resistance level set by the last 119 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 NLSN:

Nielsen N.V. operates as an information and measurement company. The company provides media and marketing information, analytics, and manufacturer and retailer expertise about what and where consumers buy, read, watch and listen. The stock currently has a dividend yield of 2.5%. NLSN has a PE ratio of 45. Currently there are 11 analysts that rate Nielsen a buy, no analysts rate it a sell, and one rates it a hold.

The average volume for Nielsen has been 2.7 million shares per day over the past 30 days. Nielsen has a market cap of $16.81 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.95 and a short float of 2.9% with 4.78 days to cover. Shares are up 1.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nielsen as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. 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 company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Professional Services industry average. The net income increased by 8.6% when compared to the same quarter one year prior, going from $58.00 million to $63.00 million.
  • The gross profit margin for NIELSEN HOLDINGS NV is rather high; currently it is at 57.34%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.32% trails the industry average.
  • NIELSEN HOLDINGS NV has improved earnings per share by 13.3% 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, NIELSEN HOLDINGS NV reported lower earnings of $1.00 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($2.63 versus $1.00).
  • NLSN, with its decline in revenue, slightly underperformed the industry average of 1.2%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Currently the debt-to-equity ratio of 1.54 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, NLSN's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.

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