Square, Inc. hitting support of a long-term moving average
Online payment solution provider Square, Inc (NYSE: SQ) has pulled back over the last four or five weeks and the stock gapped lower after its most recent earnings report. The company beat on both the top and bottom line, but investors were disappointed with the forecast.
The stock gapped sharply lower after the earnings report and it continued down for a few weeks after the report. Eventually the drop would reach 25%. The stock then attempted to rebound, but it pulled back again as the overall market was hit with some selling. The stock has since bounced back a little. What jumped out at me was how the stock pulled back to the $60.50 area both times at the lows in August. This suggests that we could be looking at a double-bottom formation.
If we look at the weekly chart for Square we see that the stock is sitting just above the 104-week moving average. I know the 104-week may be a little unconventional, but it represents two years worth of data. The moving average is currently at $60.80 and could be providing support.
The weekly stochastic readings are in oversold territory for only the fourth time in the last three and a half years thanks to the recent selling. In the three previous instances where the stock has been in oversold territory, it has been a pretty good entry point for a bullish trade.
Looking at the Tickeron Technical Analysis Overview we see that the RSI Indicator points to a transition from a Downtrend to an Uptrend -- in cases where SQ's RSI indicator exited the oversold zone, 7 of 10 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 70%. In this instance we are looking at the daily RSI indicator.
Also from the overview, the Moving Average Convergence Divergence (MACD) just turned positive. Considering data from situations where Square's MACD histogram became positive, in 22 of 26 cases, the price rose further within the following month. The odds of a continued upward trend are 85%.
Turning our attention to the fundamental analysis, Square has seen incredible earnings growth over the last three years with the average annual rate of 143%. In the most recent quarter, earnings were up by 62%. Analysts expect earnings for 2019 to increase by 64% overall.
Sales have grown at a tremendous rate as well, but not as fast as earnings. The average annual growth rate has been 38% over the last three years and the most recent quarterly report showed growth of 44%.
The return on equity is solid at 23.5%, but the company’s profit margin is a little low at 6.9%.
One area of concern is the Tickeron Valuation Rating of 90. This indicates that the company is significantly overvalued 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.
Looking at the sentiment indicators for Square, analysts are less bullish toward the company than the average stock while short sellers are somewhat neutral on the stock. There are 36 analysts following the stock at this time with 14 “buy” ratings, 18 “hold” ratings, and four “sell” ratings. The buy percentage is at 38.9% and that is well below the average buy percentage.
The short interest ratio is at 3.2 currently and that reading falls in the average range.
The overall picture is pretty good for Square. The fundamentals are good and the technical picture looks like the stock might be finding its footing. The sentiment is slightly pessimistic thanks to the low analysts’ ratings and that could help the stock in the long run.
Aroon Indicator for SQ shows an upward move is likely
SQ's Aroon Indicator triggered a bullish signal on December 16, 2024. 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 271 similar instances where the Aroon Indicator showed a similar pattern. In of the 271 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 Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 5 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SQ advanced for three days, in of 322 cases, the price rose further within the following month. The odds of a continued upward trend are .
SQ may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The 10-day RSI Indicator for SQ moved out of overbought territory on December 09, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on December 18, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on SQ as a result. In of 74 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for SQ turned negative on December 10, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SQ 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 Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. SQ’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 fair valued 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 (2.682) is normal, around the industry mean (31.078). SQ's P/E Ratio (4073.000) is considerably higher than the industry average of (160.694). Projected Growth (PEG Ratio) (0.918) is also within normal values, averaging (2.755). Dividend Yield (0.000) settles around the average of (0.084) among similar stocks. P/S Ratio (2.282) is also within normal values, averaging (58.228).
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 Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. SQ’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 87, placing this stock better than average.
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.
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a provider of credit card reader solutions for mobile devices
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