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 Arthur J Gallagher as such a stock due to the following factors:
- AJG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.2 million.
- AJG has traded 67,845 shares today.
- AJG traded in a range 355% of the normal price range with a price range of $1.87.
- AJG traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 AJG:
Arthur J. Gallagher & Co. and its subsidiaries provide insurance brokerage and risk management services to various commercial, industrial, institutional, and governmental organizations. It operates in two segments, Brokerage and Risk Management. The stock currently has a dividend yield of 3.1%. AJG has a PE ratio of 21.9. Currently there are 10 analysts that rate Arthur J Gallagher a buy, no analysts rate it a sell, and 4 rate it a hold.
The average volume for Arthur J Gallagher has been 1.3 million shares per day over the past 30 days. Arthur J Gallagher has a market cap of $7.2 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.96 and a short float of 0.6% with 1.57 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Wednesday.
rates Arthur J Gallagher as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, good cash flow from operations, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 35.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ARTHUR J GALLAGHER & CO has improved earnings per share by 12.5% 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 two years. We feel that this trend should continue. During the past fiscal year, ARTHUR J GALLAGHER & CO increased its bottom line by earning $2.07 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $2.07).
- Net operating cash flow has increased to $76.10 million or 48.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.33%.
- 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 Insurance industry and the overall market on the basis of return on equity, ARTHUR J GALLAGHER & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- AJG's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.96 is weak.
- You can view the full Arthur J Gallagher Ratings Report.