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Trade-Ideas: People's United Financial (PBCT) 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 People's United Financial (PBCT) 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 People's United Financial as such a stock due to the following factors:

  • PBCT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.1 million.
  • PBCT has traded 1.4 million shares today.
  • PBCT traded in a range 229.3% of the normal price range with a price range of $0.58.
  • PBCT traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 PBCT:

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The stock currently has a dividend yield of 4.5%. PBCT has a PE ratio of 19.9. Currently there are 2 analysts that rate People's United Financial a buy, 4 analysts rate it a sell, and 9 rate it a hold.

The average volume for People's United Financial has been 3.2 million shares per day over the past 30 days. People's United Financial has a market cap of $4.6 billion and is part of the financial sector and banking industry. The stock has a beta of 0.87 and a short float of 6.9% with 9.26 days to cover. Shares are up 18.5% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 5.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.72 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.72).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.58%. Regardless of PBCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.47% trails the industry average.
  • The revenue fell significantly faster than the industry average of 112.1%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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