JC Penney (JCP) Marked As Today's Roof Leaker Stock
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 JC Penney as such a stock due to the following factors:
- JCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $94.9 million.
- JCP has traded 1.2 million shares today.
- JCP is trading at 1.64 times the normal volume for the stock at this time of day.
- JCP 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 JCP:
J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., sells merchandise through department stores in the United States. Currently there are 6 analysts that rate JC Penney a buy, 3 analysts rate it a sell, and 7 rate it a hold.
The average volume for JC Penney has been 12.4 million shares per day over the past 30 days. JC Penney has a market cap of $2.7 billion and is part of the services sector and retail industry. The stock has a beta of 0.60 and a short float of 32.5% with 8.18 days to cover. Shares are up 34.9% year-to-date as of the close of trading on Friday.
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Analysis:
rates JC Penney as a
. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and weak operating cash flow.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 3.19 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to $42.00 million or 69.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multiline Retail industry and the overall market, PENNEY (J C) CO's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Multiline Retail industry average, but is greater than that of the S&P 500. The net income increased by 19.8% when compared to the same quarter one year prior, going from -$172.00 million to -$138.00 million.
- 37.04% is the gross profit margin for PENNEY (J C) CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.80% trails the industry average.
- You can view the full JC Penney Ratings Report.
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