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Watch Out: Barbarians At The Gate For Greenhill (GHL)

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 Greenhill ( GHL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Greenhill as such a stock due to the following factors:

  • GHL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.7 million.
  • GHL has traded 103,100 shares today.
  • GHL traded in a range 205% of the normal price range with a price range of $3.06.
  • GHL traded above its daily resistance level (quality: 18 days, meaning that the stock is crossing a resistance level set by the last 18 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in GHL with the Ticky from Trade-Ideas. See the FREE profile for GHL NOW at Trade-Ideas

More details on GHL:

Greenhill & Co., Inc., an independent investment bank, provides financial advice on mergers, acquisitions, restructurings, financings, and capital raising to corporations, partnerships, institutions, and governments worldwide. The stock currently has a dividend yield of 3.7%. GHL has a PE ratio of 31.4. Currently there are no analysts that rate Greenhill a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Greenhill has been 358,700 shares per day over the past 30 days. Greenhill has a market cap of $1.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 2.44 and a short float of 13.7% with 6.17 days to cover. Shares are down 15.9% 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 Greenhill as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • GREENHILL & CO INC has improved earnings per share by 6.0% 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 year. We feel that this trend should continue. During the past fiscal year, GREENHILL & CO INC increased its bottom line by earning $1.56 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.56).
  • GHL, with its decline in revenue, slightly underperformed the industry average of 17.1%. Since the same quarter one year prior, revenues fell by 17.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income increased by 4.3% when compared to the same quarter one year prior, going from $15.13 million to $15.78 million.
  • The gross profit margin for GREENHILL & CO INC is currently lower than what is desirable, coming in at 29.15%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 20.67% is above that of the industry average.
  • GHL has underperformed the S&P 500 Index, declining 16.62% from its price level of one year ago. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

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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