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Weekly: Mentor Graphics rises in strong trading with rising open interest, continues strong monthly trend

News Bites US Markets
February 19, 2011

Mentor Graphics (MENT.O), NASDAQ's 2nd largest Computer Integrated Systems company by market capitalisation, rose for a fourth consecutive week on Friday. The share price rose 16.0c (or 1.1%) to US$14.52 in the week ending Friday February 18. Compared with the NASDAQ-100 index which rose 13.3 points (or 0.6%) in the week, this represented a relative price change of 0.6%.


Significant Uptrend

Price Volume Trend: the price soared 16.9% in the last month. This has been propped up by firm volume 1.1 times average for the month. In the last six months the number of rises outnumbered falls 19:8 or 2.4:1.

Relativities: compared with the NASDAQ-100 index which rose 2.7% for the month, this represented a relative price increase of 14.2% for the month. In the NASDAQ market of 2,388 stocks traded today, the stock has a 6-month relative strength of 73 indicating it has outperformed 73% of the market.

Moving average price (MAP): the price to 200-day MAP ratio is 1.37, a bullish indicator. The stock is trading above both its MAPs and the 50-day MAP of US$12.703 is higher than the 200-day MAP of US$10.603, a bullish indicator. The 200-day MAP has increased to US$10.603. An increase is another bullish indicator.

Exponential Moving Average Price (EMAP) [with higher weightage to recent prices]: the price to 50-day EMAP ratio is 1.1, a bullish indicator. In the past 50 days this ratio has exceeded 1.1 six times suggesting further upside. The 50-day EMAP has increased to US$12.848. An increase is another bullish indicator.

Breakout: in the last six months the stock has hit a new 52-week high seven times, pointing to a significant uptrend.

Support: the support price is hovering at the US$12.0 level. Volume traded at the fragile support price zone was 0.2 times average during the four occasions when the support price was breached. In the last one month the first low was at US$12.0 on Jan 24, the second at US$12.01 on Jan 21. The third decline halted at US$12.11 on Jan 25 and the 4th at US$12.17 on Jan 20

Resistance: resistance is apparent at US$15.64. However, selling pressure at that level has been weak; volume was 0.5 times average during the single occasion when the resistance price was breached in the last one month. In the last one month the high was at US$15.64 on Feb 10.


Volatility: the stock traded between an intraweek low of US$14.12 and a high of US$14.57.

Relativities: in the NASDAQ market the stock has a trailing week relative strength of 55.47 indicating it is trailing 44.53% of the market.

Volume and turnover period: there were 3,478,461 shares worth US$50 million traded. The volume was 0.7 times average trading of 4,963,810 shares. The turnover rate in the 12 months to date was 257.9% (or a turnover period of 4 months).

% Discount to high: the last price is at a discount of 7.2% to the 12-month high of US$15.64 eight-days ago on 10 Feb, 2011.

Volume weighted price (VWP): the price is at a premium of 15.3% to the 3-month volume weighted average price of US$12.59. In the past year the premium has been greater than 15.3% just once, suggesting a topish level and cautious buying at the current price.


The stock is in 2 sectors.

The following index and sector rose setting the trend for its rise of 1.1% for the week (rank by percentage price change of stock for 1 week;12 months in sector/index in brackets):

Total NASDAQ Market (rank 972;388 out of 2521) which was up 17.4 points or 0.9% to 1,993.0,

NASDAQ-100 index which was up 13.3 points or 0.6% to 2,392.5

The stock's rise went against the trend set by Computer Integrated Systems sector (rank 8;2 out of 21) which was down 6.9 points or 0.3% to 2,322.7

The Computer Integrated Systems company sector is the 48th largest by market capitalisation out of NASDAQ's 69 sectors. It is made up of 21 publicly listed companies with a combined market capitalisation of US$10 billion. In 2010 earnings for the sector grew 5.9% compared with those of 2009. The main players in the sector include MICROS Systems, Mentor Graphics, Radiant Systems and FARO Technologies.


Trailing five weeks: the stock rose seventeen times (68% of the time), fell six times (24% of the time), was unchanged once (4% of the time) and was untraded once (4% of the time). The volume was 1.1 times average trading of 24,819,050 shares. The value of US$1,000 invested five weeks ago is US$1,188 [vs US$1,031 for the NASDAQ-100 index] for a capital gain of US$188.

Trailing thirteen weeks: the stock rose forty one times (63% of the time), fell twenty one times (32% of the time), was untraded twice (3% of the time) and was unchanged once (2% of the time). The volume was 0.9 times average trading of 63,536,767 shares. The value of US$1,000 invested thirteen weeks ago is US$1,215 [vs US$1,122 for the NASDAQ-100 index] for a capital gain of US$215.

Trailing Two Years: the value of US$1,000 invested two years ago is US$3,315 [vs US$2,024 for the NASDAQ-100 index] for a capital gain of US$2,315.


Quarterly Report:

In the quarter to October 31, 2010 total revenue of US$238.9 million; net profit of US$15.3 million.

Annual Report for the year ended January 31, 2010 (year-on-year comparisons with previous corresponding period)-

Favourable Changes: total revenue up 1.73% to $US802.7m; although the Total Liabilities to Operating Cash Flow ratio of 15.4 also compares unfavourably with the Joseph Piotroski benchmark of <4, it had improved by 41.82% from the previous year.; total liabilities to total assets down 5.71% to 0.5; Net tangible assets per share up 6.9% to $US6.36428; Retained earnings to total assets up 76.03% to 4.0%.

Unfavourable Changes: loss of $US21.9m; EPS reduced 76.77% to -23.0 U.S. cents; EBIT loss of $US2.1m; EBIT Margin of -0.3%; current ratio down 9.29% to 1.2; total number of shares outstanding up 5.06% to 96,474,000; Working capital to total assets down 31.89% to 5.8%; total revenue to total assets down 1.35% to 0.7.

Major Common Size Ratios: total current assets to total assets down from 35.23% to 35.21%; current debtors to total assets up from 23.0% to 23.69%; fixed assets to total assets up from 8.51% to 9.96%; cash to total assets up from 7.9% to 8.12%; intangibles to total assets down from 3.35% to 2.13%; sales and marketing expenses to revenues down from 40.23% to 37.83%; cost of goods sold to revenues down from 16.12% to 14.93%; Administration expenses to Revenues down from 12.04% to 11.49%; interest expenses to revenues down from 2.45% to 2.19%; amortisation to revenues down from 1.41% to 1.39%.


Open interest hit an eight-month high.

Same day trend: open interest rose for a second day; the stock rose for a third day. Open interest added 3.1% from 7,576 to 7,809. Combined with the price increase of 0.4 this suggests the market is strong.

Trailing one week trend: open interest rose for a third week. Open interest soared 84.2% from 4,239 a week ago while the stock increased 1.6% from US$14.36 a week ago. Combined with the rising price this also suggests the market is strong.

Open interest as % of issued capital: 780,900 shares, representing 0.8 of the issued capital.

[ranked 610 out of 1060 stocks in descending order]

Put:call ratio: open interest contracts on exchange traded options included 495 put contracts and 7,314 call contracts.

The put:call ratio was 1:14.7, up 2.9 for the day, up 67.6 in the past week and up 388.2 in the past month.

Top traded call options [volume of contracts in brackets; 1 contract is 100 shares]

Exercise US$15.0; Expires Jul 16: US$1.10 down 12.0 [5]

Top traded put options [volume of contracts in brackets; 1 contract is 100 shares]

Exercise US$12.50; Expires Mar 19: 15.0c down 40.0 [8]


Mentor Graphics vs Computer Integrated Systems sector [Computer Integrated Systems sector Total in Brackets]

Revenue of US$802.7 million[25.2% of Aggregate Sector Revenue of US$3.2 billion; up from 24.4% in the previous year.]

MCap of US$1.4 billion[14.0% of Aggregate Sector MCap of US$10 billion; up from 11.9% in the previous year.]


P/S: The price/sales ratio is 1.8.

Price to NTA: The price to net tangible asset backing per share is 2.3.


Based on 96,474,000 issued shares the market capitalisation is US$1.4 billion.


Mentor Graphics Corporation is a supplier of electronic design automation (EDA) systems, which are computer software, emulation hardware systems and intellectual property designs and databases used to automate the design, analysis and testing of electronic hardware and embedded systems software in electronic systems and components. The Company markets its products and services primarily to companies in the military/aerospace, communications, computer, consumer electronics, semiconductor, networking, multimedia and transportation industries. On June 8, 2007, the Company acquired Sierra Design Automation, Inc., a provider of high-performance place and route solutions for integrated circuits. In May 2008, the Company announced the acquisition of the assets of Ponte Solutions, Inc. In October 2008, Mentor Graphics Corporation announced the final completion of the acquisition of Flomerics Group PLC.


Reported Buying:

September 13: Mentor Graphics insider buys

Mentor Graphics (MENT.O) insider Icahn Carl C bought 100,000 shares worth approximately US$1,001,000 on September 09, 2010. The last price was USD9.9.

Reported Selling:

January 07: Mentor Graphics insider sells

Mentor Graphics (MENT.O) insider Freed Dean sold 15 shares worth approximately US$129 on November 17, 2005. The last price was US$8.60.

January 07: Mentor Graphics insider sells

Mentor Graphics (MENT.O) insider Freed Dean sold 50 shares worth approximately US$643 on July 03, 2007. The last price was US$12.90.

January 07: Mentor Graphics insider sells

Mentor Graphics (MENT.O) insider Maulsby L Don sold 1,500 shares on March 25, 2004.

January 07: Mentor Graphics insider sells

Mentor Graphics (MENT.O) insider Freed Dean sold 50 shares worth approximately US$554 on March 07, 2006. The last price was US$11.10.


The last 5 snippets were:

February 15: Achronix and Mentor Graphics Provide State of the Art Physical Synthesis Support for Speedster22i FPGAs: the World's Most Advanced FPGAs Leveraging Intels 22nm Process Technology

[News Story] SAN JOSE, Calif.--(BUSINESS WIRE)-- Achronix Semiconductor Corporation today announced the closing of a formal agreement with Mentor Graphics Corporation (NASDAQ:MENT) to provide advanced synthesis support for Achronix Semiconductor's Speedster22i Field Programmable Gate Arrays (FPGAs).

February 14: Casablanca Capital Nominates Three Directors for Election to Mentor Graphics Board

[News Story] NEW YORK--(BUSINESS WIRE)-- Casablanca Capital LLC ("Casablanca") today announced that it has notified Mentor Graphics Corporation (NASDAQ: MENT) of its intention to nominate a slate of three highly qualified individuals with extensive finance, investment and technology experience for election to Mentor's Board of Directors at the Company's 2011 Annual Meeting of Shareholders to be held on May 12, 2011.

February 07: VIA Technologies Adopts Mentor Graphics Calibre PERC for Critical ESD Checking

[News Story] WILSONVILLE, OR -- (MARKET WIRE) -- 02/07/11 -- Mentor Graphics Corporation (NASDAQ: MENT) today announced that VIA Technologies, Inc., a fabless supplier of power efficient x86 processor platforms, is adopting the Calibre(Registered) PERC electrical rule checking product to ensure that electrostatic discharge (ESD) protection meets established guidelines to help prevent circuit failures and design re-spins. By helping ensure that designers have met all ESD protection rules, the Calibre PERC product contributes to the robustness of designs in portable and high-reliability applications.

January 25: Mentor Graphics Calibre PERC Programmable Electrical Rule Checker Improves Fujitsu Chip Reliability

WILSONVILLE, Ore., January 25, 2011 - Mentor Graphics Corporation (NASDAQ: MENT) today announced that Fujitsu Semiconductor Limited is now using the Calibre(Registered) PERC product for electrical rules checks that improve the correctness and reliability of its IC designs before committing to manufacturing.

January 24: Mentor Graphics: STARC Advances Test of Low Power ICs Using Mentor Graphics Tessent TestKompress

WILSONVILLE, Ore., January 24, 2011 - Mentor Graphics Corporation (NASDAQ: MENT) today announced that the Semiconductor Technology Academic Research Center, STARC, has successfully employed the Tessent(TradeMark) TestKompress(Registered) product to expand its low power IC test methodology for ICs used in battery-powered mobile devices and other power-sensitive products.

Source: www. BuySellSignals. com

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