Harley-Davidson (HOG) Marked As Today's Roof Leaker Stock

Trade-Ideas LLC identified Harley-Davidson (HOG) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Harley-Davidson

(

HOG

) 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 Harley-Davidson as such a stock due to the following factors:

  • HOG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $257.7 million.
  • HOG has traded 1.7 million shares today.
  • HOG is trading at 3.75 times the normal volume for the stock at this time of day.
  • HOG 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 HOG:

Harley-Davidson, Inc. primarily manufactures cruiser and touring motorcycles. The company operates through two segments, Motorcycles & Related Products, and Financial Services. The stock currently has a dividend yield of 2.6%. HOG has a PE ratio of 14. Currently there are 5 analysts that rate Harley-Davidson a buy, 1 analyst rates it a sell, and 13 rate it a hold.

The average volume for Harley-Davidson has been 3.2 million shares per day over the past 30 days. Harley-Davidson has a market cap of $9.8 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.99 and a short float of 16.1% with 5.33 days to cover. Shares are up 6.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Harley-Davidson as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Automobiles industry and the overall market, HARLEY-DAVIDSON INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • HARLEY-DAVIDSON INC has improved earnings per share by 7.1% 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, HARLEY-DAVIDSON INC reported lower earnings of $3.62 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($3.99 versus $3.62).
  • Net operating cash flow has significantly decreased to $41.13 million or 76.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • HOG has underperformed the S&P 500 Index, declining 19.61% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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