Trade-Ideas LLC identified Ultimate Software Group ( ULTI) 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 Ultimate Software Group as such a stock due to the following factors:

  • ULTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $50.9 million.
  • ULTI has traded 239,876 shares today.
  • ULTI traded in a range 330.5% of the normal price range with a price range of $13.78.
  • ULTI traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 ULTI:

The Ultimate Software Group, Inc. provides cloud-based human capital management solutions primarily to enterprise companies in the United States. Its UltiPro software solution delivers the functionality businesses to manage the employee life cycle from recruitment to retirement. ULTI has a PE ratio of 258. Currently there are 14 analysts that rate Ultimate Software Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ultimate Software Group has been 335,800 shares per day over the past 30 days. Ultimate Software Group has a market cap of $5.7 billion and is part of the technology sector and internet industry. The stock has a beta of 1.19 and a short float of 7.4% with 7.43 days to cover. Shares are up 1.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultimate Software Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 26.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 114.10% to $35.34 million when compared to the same quarter last year. In addition, ULTIMATE SOFTWARE GROUP INC has also vastly surpassed the industry average cash flow growth rate of 18.88%.
  • The gross profit margin for ULTIMATE SOFTWARE GROUP INC is rather high; currently it is at 65.98%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ULTI's net profit margin of 5.29% significantly trails the industry average.
  • ULTI's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • ULTIMATE SOFTWARE GROUP INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ULTIMATE SOFTWARE GROUP INC reported lower earnings of $0.76 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($3.23 versus $0.76).

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