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 CME Group as such a stock due to the following factors:
- CME has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $177.1 million.
- CME has traded 428,329 shares today.
- CME is trading at 1.91 times the normal volume for the stock at this time of day.
- CME 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 CME:
CME Group Inc. operates the CME, CBOT, NYMEX COMEX, and KCBT futures exchanges worldwide. It operates CBOT exchange, a marketplace for trading agricultural and the U.S. The stock currently has a dividend yield of 2.5%. CME has a PE ratio of 25.7. Currently there are 6 analysts that rate CME Group a buy, 1 analyst rates it a sell, and 5 rate it a hold.
The average volume for CME Group has been 1.9 million shares per day over the past 30 days. CME Group has a market cap of $24.5 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.12 and a short float of 2.1% with 2.41 days to cover. Shares are down 7.8% year-to-date as of the close of trading on Wednesday.
rates CME Group as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.82% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.4%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although CME's debt-to-equity ratio of 0.13 is very low, it is currently higher than that of the industry average. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.14 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Diversified Financial Services industry and the overall market, CME GROUP INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $129.80 million or 45.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full CME Group Ratings Report.