Today's Roof Leaker Stock Is Accenture PLC Class A (ACN)
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 Accenture PLC Class A (ACN) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Accenture PLC Class A as such a stock due to the following factors:
- ACN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $161.7 million.
- ACN has traded 2.1 million shares today.
- ACN is trading at 9.83 times the normal volume for the stock at this time of day.
- ACN crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.EXCLUSIVE OFFER: Get the inside scoop on opportunities in ACN with the Ticky from Trade-Ideas. See the FREE profile for ACN NOW at Trade-IdeasMore details on ACN: Accenture plc provides management consulting, technology, and business process outsourcing (BPO) services worldwide. The company operates through Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources segments. The stock currently has a dividend yield of 2.4%. ACN has a PE ratio of 15.7. Currently there are 12 analysts that rate Accenture PLC Class A a buy, no analysts rate it a sell, and 7 rate it a hold.The average volume for Accenture PLC Class A has been 3.2 million shares per day over the past 30 days. Accenture PLC Class A has a market cap of $49.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.27 and a short float of 1.9% with 6.63 days to cover. Shares are up 16.5% year-to-date as of the close of trading on Monday.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 Accenture PLC Class A as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, compelling growth in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 22.6%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ACN's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market, ACCENTURE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 16.0% when compared to the same quarter one year prior, going from $578.28 million to $671.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- You can view the full Accenture PLC Class A Ratings Report.
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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