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Today's Roof Leaker Stock Is Zions Bancorp (ZION)

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 Zions Bancorp ( ZION) 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 Zions Bancorp as such a stock due to the following factors:

  • ZION has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.1 million.
  • ZION has traded 108,276 shares today.
  • ZION is trading at 1.60 times the normal volume for the stock at this time of day.
  • ZION 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 ZION with the Ticky from Trade-Ideas. See the FREE profile for ZION NOW at Trade-Ideas

More details on ZION:

Zions Bancorporation, a financial holding company, provides banking and related services. The stock currently has a dividend yield of 0.5%. ZION has a PE ratio of 19.9. Currently there are 6 analysts that rate Zions Bancorp a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Zions Bancorp has been 2.3 million shares per day over the past 30 days. Zions has a market cap of $5.6 billion and is part of the financial sector and banking industry. The stock has a beta of 1.91 and a short float of 6.6% with 6.08 days to cover. Shares are down 1.2% year-to-date as of the close of trading on Tuesday.

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 Zions Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • ZIONS BANCORPORATION's earnings per share declined by 14.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZIONS BANCORPORATION increased its bottom line by earning $1.58 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.58).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for ZIONS BANCORPORATION is currently very high, coming in at 91.67%. Regardless of ZION's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZION's net profit margin of 16.70% is significantly lower than the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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