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

People's United Financial

(

PBCT

) 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 People's United Financial as such a stock due to the following factors:

  • PBCT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.3 million.
  • PBCT has traded 1.5 million shares today.
  • PBCT traded in a range 321.8% of the normal price range with a price range of $0.69.
  • PBCT traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 PBCT:

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The stock currently has a dividend yield of 4.1%. PBCT has a PE ratio of 19. Currently there are 2 analysts that rate People's United Financial a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for People's United Financial has been 3.0 million shares per day over the past 30 days. People's United Financial has a market cap of $5.0 billion and is part of the financial sector and banking industry. The stock has a beta of 0.71 and a short float of 10.3% with 7.39 days to cover. Shares are up 8.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates People's United Financial as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • PBCT's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 11.1% 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.85 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.85).
  • 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 Commercial Banks industry average. The net income increased by 11.5% when compared to the same quarter one year prior, going from $53.10 million to $59.20 million.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 87.98%. Regardless of PBCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBCT's net profit margin of 16.94% is significantly lower than the industry average.

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