With 2014 half in the books, investors eagerly wait for signs of direction for the second half of the year. U.S. markets across the board continue to show resilience, but investors are cautious on valuations and global economic outlook. The Russell 2000, a stock market index made up on small-cap stocks, was able to break its downward slump in late May, but the price action seems to be leaning towards correction. However, the Russell 2000's weekly chart shows sign of potential continuation of the upward wave. With markets hanging around their highs and investors waiting for direction, we will look at Rentrak Corporation (NASDAQ: RENT) to see if this stock could help investors or be a potential lemon. Rentrak operates as a "media measurement and distribution company" that offers services such as box office totals and viewership totals.
Turning to fundamentals, Rentrak has a market cap of $587.79 Million and is rated a 'strong buy' by analysts. The company is currently not profitable, but the forward price to earnings of 37.61 suggests that profitability will likely be reached within the next year. Price to sales is at 4.96, price to book is at 11.27, and price to cash is at 21.85. The company has no debt and cash per share of 2.20, giving the company a current ratio of 1.7.
Earnings are expected to decline 238.6 percent this year, rise 619.10 percent next year, and rise 40 percent over the next five years. Insider transactions are up 26.5 percent signaling that insiders are gaining confidence in the business plan and execution. However, with a short float of 7.8 percent, it appears that the bears are starting to establish a foothold. Performance has been great for Rentrak; up 105.73 percent in past year and up 27.05 percent year-to-date.
Overall, Rentak has had some great performance in the past year. Economic growth and a strong U.S. consumer has helped support Rentak shares, but continued support from these sources are key if the stock is to continue moving higher. This stock certainly relies on the overall health of the economy, more so than some of the other stocks we have taken a look at.
It is my belief that Rentak's successes ultimately rely on the U.S. consumer. The company is hired for its highly analytical tools and methods to help large corporations determine the reach and interest their shows and advertisements generate among consumers. If we experience an economic decline or the consumer freezes up, a lower demand for Rentrak's services is likely to follow. Investors be sure to do your own research.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.