Roof Leaker To Watch: Consolidated Edison (ED)

Trade-Ideas LLC identified Consolidated Edison (ED) 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

Consolidated Edison

(

ED

) 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 Consolidated Edison as such a stock due to the following factors:

  • ED has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $125.7 million.
  • ED has traded 852,358 shares today.
  • ED is trading at 8.92 times the normal volume for the stock at this time of day.
  • ED 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 ED:

Consolidated Edison, Inc., through its subsidiaries, engages in regulated electric, gas, and steam delivery businesses in the United States. The stock currently has a dividend yield of 3.9%. ED has a PE ratio of 17. Currently there are no analysts that rate Consolidated Edison a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for Consolidated Edison has been 2.0 million shares per day over the past 30 days. Consolidated Edison has a market cap of $19.3 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.16 and a short float of 5.7% with 8.34 days to cover. Shares are down 1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Consolidated Edison as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, reasonable valuation levels, growth in earnings per share and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Multi-Utilities industry average. The net income increased by 2.8% when compared to the same quarter one year prior, going from $213.00 million to $219.00 million.
  • CONSOLIDATED EDISON INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CONSOLIDATED EDISON INC increased its bottom line by earning $3.71 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($4.00 versus $3.71).
  • After a year of stock price fluctuations, the net result is that ED's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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