Sea Limited hitting upper rail of downward sloped channel with earnings looming
Sea Limited (NYSE: SE) is an electronic gaming and multimedia company based in Singapore. The company is set to announce earnings results on November 12 with analysts expecting the company to report losses of $0.53 per share. The expected is lower than the $0.70 the company lost in the third quarter of last year.
Because the company has lost money to this point, the return on equity, profit margin, and operating margin are all negative. With the negative readings in these key indicators, the Tickeron SMR rating for Sea Ltd. is 100, the worst rating a company can get. The reading indicates 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 Tickeron Profit vs. Risk Rating is 100, and that is also the worst rating a company can get in this category. It indicates that the returns do not compensate for the risks. Sea's unstable profits reported over time resulted in significant drawdowns within these last five years. A stable profit reduces stock drawdown and volatility.
The Tickeron Valuation Rating for Sea is 64 and that indicates that the company is fair valued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.
In addition to the negative fundamentals, the technical picture isn't looking very good for Sea either. The stock has been trending lower since early August with a trend channel forming that defines the various cycles within the overall trend. The stock hit the upper rail of the channel on November 4 and turned lower the next day.
We also see that the stock is overbought based on the daily stochastic readings and the indicators made a bearish crossover on November 5. The 10-day RSI flirted with overbought territory, but turned lower on the downward move. The stock moved above its upper Bollinger Band on November 4 which is yet another indication that the stock is overbought and could turn lower.
Sea Limited doesn't have a great deal of analysts covering it, but all 11 analysts that are covering it rate the stock as a "buy". There is room for additional coverage on the stock, but there isn't any room for upgrades from the current coverage.
The one area that could help Sea is the short interest ratio. The ratio is at 6.5 currently and that indicates some bearish sentiment directed at the stock. If the company can issue an earnings surprise, the short sellers could add fuel to the rally as they scramble to cover their positions.
Looking back at previous earnings reports, I found two statistics that are concerning for Sea Ltd. Investors. First, the company has missed its EPS estimate in five of the last six quarters. The only time it beat during this stretch was back in May when the company only lost $0.64 per share when it was expected to lose $0.65.
The second concern was from stocksearnings.com and it showed that the stock has moved down after earnings' reports in 22 out of the last 35 quarters.
Given the fundamentals, the technical picture, the sentiment, and the earnings' history, I don't have much optimism for Sea Limited after reporting.
SE in upward trend: price rose above 50-day moving average on January 08, 2025
SE moved above its 50-day moving average on January 08, 2025 date and that indicates a change from a downward trend to an upward trend. In of 27 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 57 cases where SE's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that 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 SE advanced for three days, in of 332 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day moving average for SE crossed bearishly below the 50-day moving average on January 08, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 11 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SE declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for SE entered a downward trend on January 08, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding 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.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. SE’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
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. SE’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 better 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 Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly 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 (8.347) is normal, around the industry mean (4.602). SE's P/E Ratio (767.200) is considerably higher than the industry average of (60.338). Projected Growth (PEG Ratio) (0.619) is also within normal values, averaging (2.682). Dividend Yield (0.000) settles around the average of (0.027) among similar stocks. P/S Ratio (4.444) is also within normal values, averaging (5.577).
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General Information
a provider of online gaming services
Industry InternetRetail