BlackBerry (BBRY) Showing Signs Of Being A Roof Leaker
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
(
) 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 BlackBerry as such a stock due to the following factors:
- BBRY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $98.4 million.
- BBRY has traded 7.1 million shares today.
- BBRY is trading at 3.07 times the normal volume for the stock at this time of day.
- BBRY 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.
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More details on BBRY:
BlackBerry Limited provides wireless communications solutions worldwide. Currently there are 3 analysts that rate BlackBerry a buy, 4 analysts rate it a sell, and 12 rate it a hold.
The average volume for BlackBerry has been 13.3 million shares per day over the past 30 days. BlackBerry has a market cap of $5.8 billion and is part of the technology sector and telecommunications industry. Shares are down 2.8% year-to-date as of the close of trading on Friday.
Analysis:
rates BlackBerry as a
. The area that we feel has been the company's primary weakness has been its declining revenues.
Highlights from the ratings report include:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The revenue fell significantly faster than the industry average of 31.5%. Since the same quarter one year prior, revenues fell by 33.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BBRY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.49 is high and demonstrates strong liquidity.
- BLACKBERRY LTD reported significant earnings per share improvement 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, BLACKBERRY LTD reported poor results of -$11.17 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$11.17).
- The gross profit margin for BLACKBERRY LTD is rather high; currently it is at 63.81%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.66% is in-line with the industry average.
- You can view the full BlackBerry Ratings Report.
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