Red flags appear when a firm sacrifices profitability to join the cloud and transitions to a business model with negative margins. Add in significant competition and an overvalued stock price and investors should be running for the hills.
Unfortunately for this firm, profits are falling, competition is rising, and the stock’s valuation is priced for perfection. These issues land Acxiom in the Danger Zone this week.
With losses piling up, a weak competitive position, and expectations of tremendous profitability already embedded in the stock price, PROS Holdings is in the Danger Zone this week.
The Information Technology sector ranks third out of the ten sectors as detailed in our 4Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
Overpriced acquisitions are far from a new phenomenon, but they’ve been especially prevalent in recent months. As a result, we’ve gathered some ideas about the various reasons companies ignore the evidence and continue to overpay for acquisitions.
This week’s Danger Zone pick has since rebounded and might have investors thinking now is the time to buy. Unfortunately, the fundamentals of this company reveal a different story. Growing losses, misleading non-GAAP metrics, and significant competition land Imperva Inc. (IMPV) in the Danger Zone this week.
Companies with long histories of profit losses often attempt to sell investors on their plans to “reach scale.” But, what happens when a company reaches scale and profits remain elusive? Profitless since going public, Cornerstone OnDemand (CSOD) lands in the Danger Zone this week.
Our call on Valeant (VRX) showed how dangerous it is to trust non-GAAP earnings because they cannot be used to cover true cash costs. For these reasons and more, Blackbaud Inc. (BLKB) lands in the Danger Zone this week.
Those consultants who adopt cutting-edge tools will experience more success than those that remain wedded to older, more manual techniques. It’s time we place Traditional Corporate Consulting in the Danger Zone.
In case you missed it, or in case you wanted to watch it again, here is our live webinar from this week. David Trainer will discuss how undervalued Oracle is relative to real cash flows and ROIC and more.
Thesis: Management can boost the market value of ORCL in the amounts provided by aligning the firm’s strategy and performance compensation with real cash flows or what we call return on invested capital.
It’s time to look beyond technical price movements, earnings estimates, or analyst opinions. The reconciliation between cash flows and valuations has arrived. The market is beginning to distinguish between those companies that earn a quality ROIC and those that do not.
Corporate America has the resources to deploy a large amount of capital and invest in new technologies and innovations that can drive growth. Instead, they just keep spending more and more money on buybacks.
At the beginning of the first quarter of 2016, only the Large Cap Blend style earns an Attractive-or-better rating. Our style ratings are based on the aggregation of our fund ratings for every ETF and mutual fund in each style.
Despite deteriorating margins, lack of competitive advantage, and a sky-high valuation, Qlik Technologies (QLIK: $31/share) is up nearly 33% over the past two years and finds itself in the Danger Zone this week.
Just when we think the market is becoming more rational and beginning to focus on fundamentals again we find a stock that proves that idea wrong. Once again, we’ve identified a business that fails to generate profits, uses “adjusted” metrics as “better representations of business”, and who’s stock price is up over 200% since late 2012. ServiceNow (NOW) is in the Danger Zone this week.
The All Cap Growth style ranks sixth out of the twelve fund styles as detailed in our 4Q15 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Growth style ranked sixth as well. It gets our Neutral rating
This week we’ve identified another highflying cloud company that exhibits many of the problematic traits we saw in DWRE and SPLK. Revenue growth can only support a stock for so long and this week’s Danger Zone stock, Marketo (MKTO) has plenty of room to fall.
The All Cap Value style ranks fifth out of the twelve fund styles as detailed in our 3Q15 Style Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
In early 2012, Splunk Inc. burst onto the scene with one of the biggest IPOs of the year. Since then, the stock price has ridden the hype and is up more than 320%. This price increase should raise serious concerns for astute investors.
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