Water-Logged And Getting Wetter: W W Grainger (GWW)
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 W W Grainger as such a stock due to the following factors:
- GWW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.2 million.
- GWW has traded 935,876 shares today.
- GWW traded in a range 227.6% of the normal price range with a price range of $10.12.
- GWW traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 GWW:
W.W. Grainger, Inc. operates as a distributor of maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions primarily in the United States and Canada. The stock currently has a dividend yield of 2.2%. GWW has a PE ratio of 19. Currently there are 3 analysts that rate W W Grainger a buy, 2 analysts rate it a sell, and 9 rate it a hold.
The average volume for W W Grainger has been 803,100 shares per day over the past 30 days. W W Grainger has a market cap of $13.2 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.73 and a short float of 15.3% with 13.28 days to cover. Shares are down 17.1% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates W W Grainger as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Trading Companies & Distributors industry and the overall market, GRAINGER (W W) INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has slightly increased to $366.43 million or 9.58% when compared to the same quarter last year. Despite an increase in cash flow, GRAINGER (W W) INC's average is still marginally south of the industry average growth rate of 11.23%.
- GRAINGER (W W) INC's earnings per share declined by 11.5% 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, GRAINGER (W W) INC increased its bottom line by earning $11.45 versus $11.12 in the prior year. This year, the market expects an improvement in earnings ($11.65 versus $11.45).
- 44.18% is the gross profit margin for GRAINGER (W W) INC which we consider to be strong. Regardless of GWW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.58% trails the industry average.
- You can view the full W W Grainger Ratings Report.
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