Understanding the Potential Headwinds for Creative Realities Stock.

By Ken Smith • Thursday, August 17 12:01 • Permanent Link

One of the standouts of today's morning trading session has been Creative Realities, which logged a -37.0% drop and underperformed the S&P 500 by -37.0%. The Data Processing Services stock is now trading at $1.86 per share and is -73.36% below its average target price of $7.0. Analysts have set target prices ranging from $6.5 to 7.5 dollars per share, and have given the stock an average rating of buy.

The market seems to share this rosy outlook, since Creative Realities has a short interest of only 1.3%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

A possible indicator of market sentiment on a stock (besides its share price, of course) is the portion of institutional investors that make up its shareholders. Institutions such as banks, hedge funds, and wealth managers deploy significant resources towards identifying good investments. If they are invested heavily in a given company's stock, it could mean it's a good investment. Or it could mean the company is being targeted by a takeover attempt.

For what it's worth, institutions own 29.3% of Creative Realities's shares, which is an average amount. It means that many institutions are invested, but not to the extent that they would be in a stock such as Apple or Amazon, whose institutional ownership rates hover around 60%. Bear in mind that institutional ownership is just one piece of the puzzle in determining market sentiment, and you should not consider this factor alone in making an investment decision.

Overall, there is positive market sentiment towards Creative Realities because of an analyst consensus of strong upside potential, a buy rating, a very low short interest, and only a small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.

At a glance, here are some essential statistics you may want to know about CREX:

It has trailing 12 month earnings per share (EPS) of $0.19 per share
Creative Realities has a trailing 12 month Price to Earnings (P/E) ratio of 9.8 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 0.58 in contrast to the S&P 500's average ratio of 2.95
Creative Realities is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.