Water-Logged And Getting Wetter: United Technologies (UTX)
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified United Technologies as such a stock due to the following factors:
- UTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $332.0 million.
- UTX has traded 4.8 million shares today.
- UTX traded in a range 217.7% of the normal price range with a price range of $3.54.
- UTX traded below its daily resistance level (quality: 34 days, meaning that the stock is crossing a resistance level set by the last 34 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on UTX:
United Technologies Corporation provides technology products and services to building systems and aerospace industries worldwide. The stock currently has a dividend yield of 2.1%. UTX has a PE ratio of 17.5. Currently there are 12 analysts that rate United Technologies a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for United Technologies has been 4.0 million shares per day over the past 30 days. United has a market cap of $108.3 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.05 and a short float of 1.3% with 3.58 days to cover. Shares are up 5.9% year-to-date as of the close of trading on Monday.
Analysis:
rates United Technologies as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- UTX's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- UNITED TECHNOLOGIES CORP'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 two years. We feel that this trend should continue. During the past fiscal year, UNITED TECHNOLOGIES CORP increased its bottom line by earning $6.82 versus $6.22 in the prior year. This year, the market expects an improvement in earnings ($7.00 versus $6.82).
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- 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 Aerospace & Defense industry and the overall market on the basis of return on equity, UNITED TECHNOLOGIES CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 0.7% when compared to the same quarter one year prior, going from $1,463.00 million to $1,473.00 million.
- You can view the full United Technologies Ratings Report.
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