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Motorola Solutions (MSI) Marked As Today's Roof Leaker 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 Motorola Solutions ( MSI) 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 Motorola Solutions as such a stock due to the following factors:

  • MSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $99.1 million.
  • MSI has traded 435,147 shares today.
  • MSI is trading at 4.02 times the normal volume for the stock at this time of day.
  • MSI 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 MSI with the Ticky from Trade-Ideas. See the FREE profile for MSI NOW at Trade-Ideas

More details on MSI:

Motorola Solutions, Inc. designs, manufactures, and sells communications infrastructure, devices, system software, and applications. The company operates in two segments, Government and Enterprise. The stock currently has a dividend yield of 1.9%. MSI has a PE ratio of 16.2. Currently there are 4 analysts that rate Motorola Solutions a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Motorola Solutions has been 1.2 million shares per day over the past 30 days. Motorola has a market cap of $16.2 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.69 and a short float of 2.3% with 3.25 days to cover. Shares are down 6.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Motorola Solutions as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures 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:

  • MSI's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Communications Equipment industry and the overall market, MOTOROLA SOLUTIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $741.00 million or 31.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.80%.
  • The net income growth from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income increased by 1.8% when compared to the same quarter one year prior, going from $336.00 million to $342.00 million.
  • MSI's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MSI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.63 is high and demonstrates strong liquidity.

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