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 "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 MasterCard as such a stock due to the following factors:
- MA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $520.5 million.
- MA has traded 1.2 million shares today.
- MA is trading at 3.00 times the normal volume for the stock at this time of day.
- MA 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 MA:
MasterCard Incorporated provides transaction processing and other payment-related services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services. The stock currently has a dividend yield of 0.6%. MA has a PE ratio of 30.1. Currently there are 19 analysts that rate MasterCard a buy, no analysts rate it a sell, and 9 rate it a hold.
The average volume for MasterCard has been 7.0 million shares per day over the past 30 days. MasterCard has a market cap of $82.7 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.76 and a short float of 1.3% with 1.93 days to cover. Shares are down 11% year-to-date as of the close of trading on Thursday.
rates MasterCard as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. 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 greatly exceeded the industry average of 20.2%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MASTERCARD INC has improved earnings per share by 7.0% 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, MASTERCARD INC increased its bottom line by earning $2.57 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.57).
- The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 3.0% when compared to the same quarter one year prior, going from $605.00 million to $623.00 million.
- The gross profit margin for MASTERCARD INC is rather high; currently it is at 51.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.30% significantly outperformed against the industry average.
- Net operating cash flow has increased to $1,199.00 million or 38.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.22%.
- You can view the full MasterCard Ratings Report.