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Trade-Ideas: Roper Industries (ROP) Is Today's "Water-Logged And Getting Wetter" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Roper Industries ( ROP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Roper Industries as such a stock due to the following factors:

  • ROP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.3 million.
  • ROP has traded 390,492 shares today.
  • ROP traded in a range 225.5% of the normal price range with a price range of $4.26.
  • ROP traded below its daily resistance level (quality: 32 days, meaning that the stock is crossing a resistance level set by the last 32 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ROP:

Roper Industries, Inc. designs, manufactures, and distributes radio frequency (RF) products and services, industrial technology products, energy systems and controls, and medical and scientific imaging products and software. The stock currently has a dividend yield of 0.5%. ROP has a PE ratio of 27.0. Currently there are 4 analysts that rate Roper Industries a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Roper Industries has been 370,200 shares per day over the past 30 days. Roper has a market cap of $13.3 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.00 and a short float of 2.2% with 5.80 days to cover. Shares are up 20.5% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Roper Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • ROP's revenue growth has slightly outpaced the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 11.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for ROPER INDUSTRIES INC/DE is rather high; currently it is at 63.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.83% is above that of the industry average.
  • Net operating cash flow has increased to $139.74 million or 17.10% when compared to the same quarter last year. In addition, ROPER INDUSTRIES INC/DE has also modestly surpassed the industry average cash flow growth rate of 13.87%.
  • ROPER INDUSTRIES INC/DE' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ROPER INDUSTRIES INC/DE increased its bottom line by earning $4.85 versus $4.34 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $4.85).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

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