Fundamental and Technical Analysis at Odds for Trio of Software Stocks ahead of Earnings
The software industry has been one of the top performers over the past few years. The industry as a whole has seen good earnings and revenue growth, and that has translated to the stocks in the industry doing well. The iShares Expanded Tech-Software Sector ETF (IGV) has gained over 80% in the last two years while the S&P 500 is up a far more modest 31%.
There are three companies in the packaged software arena that are set to release earnings over the next week and two of those three have experienced extremely strong moves. DocuSign (DOCU) and Cloudera (CLDR) are set to report earnings on December 4, and Coupa Software (COUP) is set to report on December 7.
Over the past two years, DocuSign and Coupa have both gained over 400% while Cloudera has lost 8.2%. The gains for the two, as impressive as they have been, highlight how the stocks have performed well despite the fundamentals not being as strong as the technical picture.
Looking at the Tickeron Fundamental Screener, each of the three companies only has one area where it gets a positive reading. Coupa and DocuSign both get positive ratings for their Outlook Rating while Cloudera gets a positive rating for its Valuation Rating. After that, it is primarily negative readings for the companies.
Two areas in particular where the companies score poorly are the Profit vs. Risk Ratings and the P/E Growth Ratings. All three companies get a reading of 100 in both categories and that is the worst score a company can get. Coupa and DocuSign both get poor ratings in the Valuation Ratings and their SMR ratings as well. The only area where all three companies get neutral ratings is in the Price Growth Ratings.
The technical picture for the stocks is considerably better. DocuSign has four bullish signals and two bearish signals while Coupa has five bullish signals and only one bearish signal. Cloudera’s numbers aren’t as good, but they are still strong with four bullish signals and three bearish signals. All three stocks have received bullish signals from the MACD and Momentum indicators within the last few weeks. Coupa and Cloudera had bullish signals generated from the AROON indicator on December 2.
As for the scorecard grades from Tickeron, Coupa is considered a “strong buy” at this time while DocuSign and Cloudera are considered “buys”. Looking at how Wall Street analysts and short sellers view these three stocks, DocuSign has pretty average sentiment while Cloudera and Coupa are both receiving a more pessimism directed at them than the average stock.
There are 19 analysts following DocuSign with 13 “buy” ratings, five “hold” ratings, and one “sell” rating. That puts the buy percentage at 68.4% and that is in the average range. Coupa has 26 analysts following it with 13 “buy” ratings, 10 “hold” ratings, and three “sell” ratings. This gives them a buy percentage of 50% and that is below average. Cloudera is the least liked one as far as the analysts are concerned. Out of 15 ratings, there are four “buys” and 11 “holds”, making the buy percentage 26.7% and that is far below average.
As for the short interest ratios, Coupa’s ratio is 5.35 and that is well above average and a sign of pessimism. Cloudera’s short interest ratio is 4.3 and that is slightly above the average ratio in the 3.0 range. DocuSign’s ratio is at 2.02 presently. The ratio did drop in the first part of November, but that was due to a big jump in the average daily trading volume. The short interest for DocuSign actually rose to 9.11 million shares from 8.45 million shares during the period.
Here’s how the companies compare to one another and how they compare to other companies in general from the standpoint of the fundamental ratings and the technical indicators.
Aroon Indicator for DOCU shows an upward move is likely
DOCU's Aroon Indicator triggered a bullish signal on June 01, 2023. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 274 similar instances where the Aroon Indicator showed a similar pattern. In of the 274 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 15, 2023. You may want to consider a long position or call options on DOCU as a result. In of 84 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for DOCU just turned positive on May 08, 2023. Looking at past instances where DOCU's MACD turned positive, the stock continued to rise in of 52 cases over the following month. The odds of a continued upward trend are .
DOCU moved above its 50-day moving average on May 26, 2023 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for DOCU crossed bullishly above the 50-day moving average on May 30, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where DOCU advanced for three days, in of 315 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The RSI Oscillator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
The 50-day moving average for DOCU moved below the 200-day moving average on May 04, 2023. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where DOCU declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
DOCU broke above its upper Bollinger Band on May 22, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. DOCU’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (18.484) is normal, around the industry mean (31.500). P/E Ratio (0.000) is within average values for comparable stocks, (167.496). Projected Growth (PEG Ratio) (1.351) is also within normal values, averaging (4.150). Dividend Yield (0.000) settles around the average of (0.039) among similar stocks. P/S Ratio (4.505) is also within normal values, averaging (75.690).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. DOCU’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 89, placing this stock worse than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a provider of cloud-based electronic signature solutions
Industry PackagedSoftware
DOCU and
Correlation & Price change
A.I.dvisor indicates that over the last year, DOCU has been closely correlated with PD. These tickers have moved in lockstep 74% of the time. This A.I.-generated data suggests there is a high statistical probability that if DOCU jumps, then PD could also see price increases.
| Ticker / NAME | Correlation To DOCU | 1D Price Change % | ||
|---|---|---|---|---|
| DOCU | 100% | +1.42% | ||
| PD - DOCU | 74% Closely correlated | +1.98% | ||
| HUBS - DOCU | 71% Closely correlated | -0.04% | ||
| ESTC - DOCU | 71% Closely correlated | -1.59% | ||
| ASAN - DOCU | 70% Closely correlated | -4.31% | ||
| GWRE - DOCU | 69% Closely correlated | -0.17% | ||
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