Trade-Ideas LLC identified

Total System Services

(

TSS

) 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 Total System Services as such a stock due to the following factors:

  • TSS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.8 million.
  • TSS has traded 896,509 shares today.
  • TSS is trading at 1.88 times the normal volume for the stock at this time of day.
  • TSS 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 TSS:

Total System Services, Inc. provides payment processing, merchant, and related payment services to financial and nonfinancial institutions in the United States, Europe, Canada, Mexico, and internationally. The stock currently has a dividend yield of 0.8%. TSS has a PE ratio of 23. Currently there are 7 analysts that rate Total System Services a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Total System Services has been 1.2 million shares per day over the past 30 days. Total System Services has a market cap of $9.6 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.28 and a short float of 1.4% with 1.68 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Total System Services as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • TSS's very impressive revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues leaped by 66.3%. 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.
  • Net operating cash flow has significantly increased by 53.82% to $195.05 million when compared to the same quarter last year. In addition, TOTAL SYSTEM SERVICES INC has also vastly surpassed the industry average cash flow growth rate of -21.93%.
  • TOTAL SYSTEM SERVICES INC's earnings per share declined by 15.6% 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, TOTAL SYSTEM SERVICES INC increased its bottom line by earning $1.96 versus $1.46 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $1.96).
  • 36.38% is the gross profit margin for TOTAL SYSTEM SERVICES INC which we consider to be strong. Regardless of TSS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.05% trails the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.

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