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 CIT Group as such a stock due to the following factors:
- CIT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.2 million.
- CIT has traded 527,581 shares today.
- CIT traded in a range 214.1% of the normal price range with a price range of $2.24.
- CIT traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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 CIT:
CIT Group Inc. operates as the holding company for CIT bank that provides commercial financing and leasing products; and a suite of savings options in the United States. The stock currently has a dividend yield of 1.3%. CIT has a PE ratio of 8.9. Currently there are 9 analysts that rate CIT Group a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for CIT Group has been 1.3 million shares per day over the past 30 days. CIT Group has a market cap of $8.2 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.44 and a short float of 2.3% with 2.03 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Monday.
rates CIT Group as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
Highlights from the ratings report include:
- CIT's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CIT GROUP INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, CIT GROUP INC turned its bottom line around by earning $3.23 versus -$2.96 in the prior year. This year, the market expects an improvement in earnings ($5.56 versus $3.23).
- 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 Commercial Banks industry and the overall market on the basis of return on equity, CIT GROUP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Net operating cash flow has significantly decreased to $128.20 million or 82.79% when compared to the same quarter last year. Despite a decrease in cash flow of 82.79%, CIT GROUP INC is in line with the industry average cash flow growth rate of -83.71%.
- CIT has underperformed the S&P 500 Index, declining 10.13% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full CIT Group Ratings Report.