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Rick Pendergraft's Avatar
published in Blogs
Apr 05, 2019

Wayfair: The technical analysis and fundamentals are in disagreement

Internet retailer Wayfair (NYSE: W) seems to be defying the odds in my opinion. The stock has performed incredibly well over the last few months, but the fundamentals of the company are really weak compared to other companies.

Looking at the daily chart, we see that Wayfair more than doubled from its December low to the recent high. The rally got a big boost from the earnings report on February 22 and we see that on the chart with the big gap higher. The stock has pulled back in recent weeks, but it looks like it is hitting support in the $150 area.

The daily stochastics moved from overbought to oversold during the recent pullback and they performed a bullish crossover on April 2.

The AI Trend Prediction tool generated a bullish signal for Wayfair on April 1. The predicted move calls for a gain of at least 2% over the next week and it came with a confidence level of 74%. Previous predictions on Wayfair have been successful 85% of the time.

I wrote a bearish article about the stock back on December 5 and another one on January 15. The article in December turned out to be a great call as the stock fell from the $110 area all the way down to $80. The article in January was completely wrong as the stock rallied right through resistance.

I mentioned earlier that Wayfair’s fundamentals were weak. The company scores a 2 on Investor’s Business Daily’s EPS rating system and that means that 98% of companies in their database have seen better earnings growth in recent years and the most recent quarter. The company gets a D in IBD’s SMR rating system and that is the second lowest grade possible.

The company has continued to lose money and therefore it doesn’t have a return on equity and the profit margin is a -5.4%. The only thing that keeps the SMR rating from being an E is the sales growth. The company has seen sales grow at a rate of 42% per year over the last three years and they grew by 40% in the most recent quarter.

The short-term chart looks good for Wayfair, but I would have trouble making a long-term investment in Wayfair with the current earnings picture.

Related Ticker: W

W's Indicator enters downward trend

The Aroon Indicator for W entered a downward trend on September 21, 2023. Tickeron's A.I.dvisor identified a pattern where the AroonDown red line was above 70 while the AroonUp green line was below 30 for three straight days. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options. A.I.dvisor looked at 250 similar instances where the Aroon Indicator formed such a pattern. In of the 250 cases the stock moved lower. This puts the odds of a downward move at .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on September 18, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on W as a result. In of 78 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 W turned negative on September 18, 2023. 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 44 similar instances when the indicator turned negative. In of the 44 cases the stock turned lower in the days that followed. This puts the odds of success at .

W moved below its 50-day moving average on September 14, 2023 date and that indicates a change from an upward trend to a downward trend.

The 10-day moving average for W crossed bearishly below the 50-day moving average on September 18, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 18 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 W declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

Bullish Trend Analysis

The RSI Indicator demonstrates that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.

The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 3 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 W advanced for three days, in of 303 cases, the price rose further within the following month. The odds of a continued upward trend are .

W may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. W’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

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.

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 (0.000) is normal, around the industry mean (17.208). P/E Ratio (147.059) is within average values for comparable stocks, (72.904). W's Projected Growth (PEG Ratio) (23.500) is very high in comparison to the industry average of (2.306). Dividend Yield (0.000) settles around the average of (0.039) among similar stocks. P/S Ratio (0.544) is also within normal values, averaging (9.397).

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. W’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 92, placing this stock worse than average.

Notable companies

The most notable companies in this group are Amazon.com (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), PDD Holdings (NASDAQ:PDD), JD.com (NASDAQ:JD), eBay (NASDAQ:EBAY), Vipshop Holdings Limited (NYSE:VIPS), Chewy (NYSE:CHWY), Wayfair (NYSE:W), Just Eat Takeaway.com NV (OTC:JTKWY), Revolve Group (NYSE:RVLV).

Industry description

The internet retail industry includes companies that sell products and services through the Internet. With more and more consumers using online retailers, the companies have seen a big increase in the use of their services. Some of the companies in the group are focused on selling business-to-business products and services. Others sell business-to-consumer products and services. Internet retailers offer a wide variety of products like books, apparel, and electronics. Some companies even specialize in only one or two categories. One potentially critical factor for players to thrive in this space is the quality and speed of product delivery. This requires an investment in efficient distribution networks. Things like logistics are important factors in the success in the extremely competitive industry. For a company to stay relevant in the industry it must have effective pricing strategies and upgraded websites. The websites must be easy to navigate and engaging for customers. In addition to the revenues generated from straight sales, internet retailers can generate revenue from subscription fees and advertising. Amazon.com, Inc., Alibaba Group, and JD.com are some of the global leaders.

Market Cap

The average market capitalization across the Internet Retail Industry is 27.37B. The market cap for tickers in the group ranges from 30 to 1.33T. AMZN holds the highest valuation in this group at 1.33T. The lowest valued company is YUKA at 30.

High and low price notable news

The average weekly price growth across all stocks in the Internet Retail Industry was -3%. For the same Industry, the average monthly price growth was -7%, and the average quarterly price growth was 8%. YJ experienced the highest price growth at 27%, while FTCH experienced the biggest fall at -21%.

Volume

The average weekly volume growth across all stocks in the Internet Retail Industry was -23%. For the same stocks of the Industry, the average monthly volume growth was 10% and the average quarterly volume growth was 1%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 63
P/E Growth Rating: 70
Price Growth Rating: 66
SMR Rating: 77
Profit Risk Rating: 92
Seasonality Score: -20 (-100 ... +100)
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Technical Analysis# Of IndicatorsAvg. Odds
   
   
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A.I.Advisor
published price charts
A.I. Advisor
published General Information

General Information

an online home furnishing store

Industry InternetRetail

Profile
Fundamentals
Details
Industry
Internet Retail
Address
4 Copley Place
Phone
+1 617 532-6100
Employees
15745
Web
https://www.wayfair.com
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W and

Correlation & Price change

A.I.dvisor indicates that over the last year, W has been loosely correlated with CVNA. These tickers have moved in lockstep 65% of the time. This A.I.-generated data suggests there is some statistical probability that if W jumps, then CVNA could also see price increases.

1D
1W
1M
1Q
6M
1Y
5Y
Ticker /
NAME
Correlation
To W
1D Price
Change %
W100%
-1.97%
CVNA - W
65%
Loosely correlated
-2.12%
ETSY - W
61%
Loosely correlated
-0.70%
RVLV - W
60%
Loosely correlated
-0.16%
JMIA - W
58%
Loosely correlated
-0.41%
GLBE - W
58%
Loosely correlated
+1.48%
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