PPL (PPL) Spotted As Roof Leaker Today

Trade-Ideas LLC identified PPL ( PPL) 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 PPL as such a stock due to the following factors:

  • PPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $131.6 million.
  • PPL has traded 2.4 million shares today.
  • PPL is trading at 1.72 times the normal volume for the stock at this time of day.
  • PPL 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 PPL:

PPL Corporation, a utility company, delivers electricity and natural gas in the United States and the United Kingdom. The stock currently has a dividend yield of 4.1%. PPL has a PE ratio of 16. Currently there are 2 analysts that rate PPL a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for PPL has been 4.9 million shares per day over the past 30 days. PPL has a market cap of $25.2 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.50 and a short float of 1.1% with 2.03 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PPL as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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 Electric Utilities industry and the overall market, PPL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PPL CORP is rather high; currently it is at 52.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.91% significantly outperformed against the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • PPL, with its decline in revenue, slightly underperformed the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PPL CORP's earnings per share declined by 14.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PPL CORP increased its bottom line by earning $2.38 versus $2.18 in the prior year. For the next year, the market is expecting a contraction of 1.5% in earnings ($2.35 versus $2.38).

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