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.
W in upward trend: 10-day moving average broke above 50-day moving average on May 08, 2023
The 10-day moving average for W crossed bullishly above the 50-day moving average on May 08, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 19 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 .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 26, 2023. You may want to consider a long position or call options on W as a result. In of 77 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 W just turned positive on May 30, 2023. Looking at past instances where W's MACD turned positive, the stock continued to rise in of 40 cases over the following month. The odds of a continued upward trend are .
W 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.
Following a +1 3-day Advance, the price is estimated to grow further. Considering data from situations where W advanced for three days, in of 312 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 243 cases where W Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
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 .
W broke above its upper Bollinger Band on June 01, 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. W’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued 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 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 (18.853). P/E Ratio (147.059) is within average values for comparable stocks, (73.410). W's Projected Growth (PEG Ratio) (23.500) is very high in comparison to the industry average of (2.599). Dividend Yield (0.000) settles around the average of (0.039) among similar stocks. P/S Ratio (0.384) is also within normal values, averaging (8.443).
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 95, placing this stock worse than average.
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
an online home furnishing store
Industry InternetRetail
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| PSIL | 1.75 | 0.05 | +2.94% |
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| FT Cboe Vest Fund of Deep Buffer ETFs | |||
| HYRM | 22.16 | 0.12 | +0.57% |
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W and
Correlation & Price change
A.I.dvisor indicates that over the last year, W has been closely correlated with ETSY. These tickers have moved in lockstep 75% of the time. This A.I.-generated data suggests there is a high statistical probability that if W jumps, then ETSY could also see price increases.
