Trade-Ideas LLC identified

DSW

(

DSW

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

  • DSW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.6 million.
  • DSW has traded 525,905 shares today.
  • DSW traded in a range 217.2% of the normal price range with a price range of $1.19.
  • DSW traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 DSW:

DSW Inc., together with its subsidiaries, operates as a branded footwear and accessories retailer in the United States. The company operates through two segments, DSW and Affiliated Business Group. The stock currently has a dividend yield of 3.8%. DSW has a PE ratio of 15. Currently there are 4 analysts that rate DSW a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for DSW has been 2.0 million shares per day over the past 30 days. DSW has a market cap of $1.7 billion and is part of the services sector and retail industry. The stock has a beta of 0.70 and a short float of 10.3% with 3.10 days to cover. Shares are down 10.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates DSW as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • DSW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that DSW's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for DSW INC is currently lower than what is desirable, coming in at 32.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.40% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $9.81 million or 80.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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