Trade-Ideas LLC identified

Aramark

(

ARMK

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

  • ARMK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.2 million.
  • ARMK has traded 577,590 shares today.
  • ARMK traded in a range 231.7% of the normal price range with a price range of $1.67.
  • ARMK 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ARMK with the Ticky from Trade-Ideas. See the FREE profile for ARMK NOW at Trade-Ideas

More details on ARMK:

Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients primarily in North America. The stock currently has a dividend yield of 1.1%. ARMK has a PE ratio of 34. Currently there are 6 analysts that rate Aramark a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Aramark has been 1.8 million shares per day over the past 30 days. Aramark has a market cap of $7.5 billion and is part of the services sector and leisure industry. Shares are down 0% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Aramark as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • ARAMARK's earnings per share declined by 26.3% 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, ARAMARK increased its bottom line by earning $0.63 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $0.63).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.8%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, ARAMARK's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The debt-to-equity ratio is very high at 3.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ARMK maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has significantly decreased by 28.0% when compared to the same quarter one year ago, falling from $46.87 million to $33.76 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.