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 Ralph Lauren as such a stock due to the following factors:
- RL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $140.7 million.
- RL has traded 152,519 shares today.
- RL is trading at 1.62 times the normal volume for the stock at this time of day.
- RL 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 RL:
Ralph Lauren Corporation designs, markets, and distributes lifestyle products worldwide. The company operates in three segments: Wholesale, Retail, and Licensing. The stock currently has a dividend yield of 1.1%. RL has a PE ratio of 19.3. Currently there are 9 analysts that rate Ralph Lauren a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Ralph Lauren has been 847,500 shares per day over the past 30 days. Ralph Lauren has a market cap of $9.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.82 and a short float of 5.5% with 3.79 days to cover. Shares are down 9.2% year-to-date as of the close of trading on Monday.
rates Ralph Lauren as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- RL's revenue growth trails the industry average of 15.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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.
- RL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $415.00 million or 40.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.43%.
- The gross profit margin for RALPH LAUREN CORP is rather high; currently it is at 61.07%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.48% trails the industry average.
- You can view the full Ralph Lauren Ratings Report.