Trade-Ideas LLC identified Brocade Communications Systems ( BRCD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Brocade Communications Systems as such a stock due to the following factors:

  • BRCD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.9 million.
  • BRCD has traded 134,806 shares today.
  • BRCD is down 4.1% today.
  • BRCD was up 13.5% yesterday.

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More details on BRCD:

Brocade Communications Systems, Inc. provides storage area networking (SAN) and Internet protocol (IP) networking solutions for businesses and organizations worldwide. It operates through three segments: SAN Products, IP Networking Products, and Global Services. The stock currently has a dividend yield of 2.2%. BRCD has a PE ratio of 1. Currently there is 1 analyst that rates Brocade Communications Systems a buy, 1 analyst rates it a sell, and 15 rate it a hold.

The average volume for Brocade Communications Systems has been 4.5 million shares per day over the past 30 days. Brocade Communications Systems has a market cap of $3.4 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 0.64 and a short float of 1.3% with 0.76 days to cover. Shares are down 7.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Brocade Communications Systems as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels, impressive record of earnings per share growth and increase in net income. 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 current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.23, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Communications Equipment industry and the overall market, BROCADE COMMUNICATIONS SYS's return on equity exceeds that of both the industry average and the S&P 500.
  • BROCADE COMMUNICATIONS SYS has improved earnings per share by 15.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BROCADE COMMUNICATIONS SYS increased its bottom line by earning $0.79 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.79).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Communications Equipment industry average. The net income increased by 7.3% when compared to the same quarter one year prior, going from $87.27 million to $93.65 million.

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