Southern (SO) Roof Leaking Today

Trade-Ideas LLC identified Southern (SO) 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

Southern

(

SO

) 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 Southern as such a stock due to the following factors:

  • SO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $234.1 million.
  • SO has traded 587,128 shares today.
  • SO is trading at 2.12 times the normal volume for the stock at this time of day.
  • SO 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 SO:

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The stock currently has a dividend yield of 4.9%. SO has a PE ratio of 17. Currently there is 1 analyst that rates Southern a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for Southern has been 5.2 million shares per day over the past 30 days. Southern has a market cap of $40.4 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.21 and a short float of 3% with 4.71 days to cover. Shares are down 8.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Southern as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • SO's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 43.08% is the gross profit margin for SOUTHERN CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.94% is above that of the industry average.
  • SOUTHERN CO has improved earnings per share by 31.3% 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 year. We feel that this trend should continue. During the past fiscal year, SOUTHERN CO increased its bottom line by earning $2.18 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.18).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 31.8% when compared to the same quarter one year prior, rising from $735.00 million to $969.00 million.
  • In its most recent trading session, SO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

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