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SVB Financial Group (SIVB) Roof Leaking Today

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 SVB Financial Group ( SIVB) 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 SVB Financial Group as such a stock due to the following factors:

  • SIVB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.6 million.
  • SIVB has traded 116,007 shares today.
  • SIVB is trading at 6.48 times the normal volume for the stock at this time of day.
  • SIVB 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 SIVB with the Ticky from Trade-Ideas. See the FREE profile for SIVB NOW at Trade-Ideas

More details on SIVB:

SVB Financial Group, a diversified financial services company, provides various banking and financial products and services. It operates in three segments: Global Commercial Bank, SVB Private Bank, and SVB Capital. SIVB has a PE ratio of 17.9. Currently there are 6 analysts that rate SVB Financial Group a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for SVB Financial Group has been 405,300 shares per day over the past 30 days. SVB Financial Group has a market cap of $4.7 billion and is part of the financial sector and banking industry. The stock has a beta of 2.04 and a short float of 1.3% with 1.17 days to cover. Shares are down 0.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SVB Financial Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • SIVB's very impressive revenue growth greatly exceeded the industry average of 9.0%. Since the same quarter one year prior, revenues leaped by 106.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SVB FINANCIAL GROUP reported significant earnings per share improvement 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, SVB FINANCIAL GROUP increased its bottom line by earning $4.69 versus $3.90 in the prior year. This year, the market expects an improvement in earnings ($5.81 versus $4.69).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 123.3% when compared to the same quarter one year prior, rising from $40.89 million to $91.30 million.
  • The gross profit margin for SVB FINANCIAL GROUP is currently very high, coming in at 98.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.71% is above that of the industry average.
  • Powered by its strong earnings growth of 116.66% and other important driving factors, this stock has surged by 41.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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