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.
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 McGraw Hill Financial as such a stock due to the following factors:
- MHFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $120.8 million.
- MHFI has traded 531,956 shares today.
- MHFI is trading at 1.76 times the normal volume for the stock at this time of day.
- MHFI 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 MHFI:
McGraw Hill Financial, Inc. provides benchmarks and ratings, analytics, data, and research services for the capital, commodities, and commercial markets worldwide. The stock currently has a dividend yield of 1.2%. Currently there are 7 analysts that rate McGraw Hill Financial a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for McGraw Hill Financial has been 1.2 million shares per day over the past 30 days. McGraw Hill Financial has a market cap of $28.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.69 and a short float of 0.9% with 1.95 days to cover. Shares are up 11.9% year-to-date as of the close of trading on Monday.
rates McGraw Hill Financial as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Financial Services industry average. The net income increased by 22.2% when compared to the same quarter one year prior, going from $248.00 million to $303.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 6.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MCGRAW HILL FINANCIAL has improved earnings per share by 26.4% 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, MCGRAW HILL FINANCIAL swung to a loss, reporting -$1.12 versus $2.80 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus -$1.12).
- The debt-to-equity ratio is very high at 2.16 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, MHFI maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, MCGRAW HILL FINANCIAL's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full McGraw Hill Financial Ratings Report.