Finish Line (FINL) Stock Slowing Down

The next chart support for Finish Line (FINL) is likely to be around the $10 area.
By Bruce Kamich ,

NEW YORK (TheStreet) -- Shares of Finish Line (FINL) have been under pressure in recent months, but with the break of key long-term support, FINL is not finished declining.

When FINL broke below $24, chart above, the whole chart picture changed for the worse. We have a big gap lower and heavy volume followed by a dead cross of the 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line is pointed down and indicates that liquidation has been the order of the day. The momentum study tells us that the rate of decline has slowed, but FINL has broken through too much chart support, see chart below.

Note that FINL has broken the key support lows of 2011 and 2012. Looking back from right to left, the next chart support for FINL is likely to be the old resistance from 2009, or around the $10 area. FINL is oversold and might bounce before grinding lower.

For a fundamental view of Finish Line's latest earnings report, check out Chris Versace's analysis at Trifecta Stocks, a model portfolio comprised of stocks that have passed rigorous quantitative, fundamental and technical tests.

TheStreet Ratings team rates FINISH LINE INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

We rate FINISH LINE INC (FINL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FINISH LINE INC has improved earnings per share by 5.5% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, FINISH LINE INC increased its bottom line by earning $1.71 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.71).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FINL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that FINL's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, FINISH LINE INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income has decreased by 1.0% when compared to the same quarter one year ago, dropping from $26.16 million to $25.90 million.
  • You can view the full analysis from the report here: FINL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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