Trade-Ideas LLC identified

ServiceMaster Global Holdings

(

SERV

) 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 ServiceMaster Global Holdings as such a stock due to the following factors:

  • SERV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.1 million.
  • SERV has traded 1.7 million shares today.
  • SERV is trading at 1.54 times the normal volume for the stock at this time of day.
  • SERV 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 SERV:

ServiceMaster Global Holdings, Inc. provides residential and commercial services in the United States. It operates in three segments: Terminix, American Home Shield, and the Franchise Services Group. SERV has a PE ratio of 32. Currently there are 4 analysts that rate ServiceMaster Global Holdings a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for ServiceMaster Global Holdings has been 1.5 million shares per day over the past 30 days. ServiceMaster Global has a market cap of $5.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.58 and a short float of 5% with 3.44 days to cover. Shares are down 0.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates ServiceMaster Global Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. 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:

  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SERVICEMASTER GLOBAL HLDGS has improved earnings per share by 33.3% 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 year. We feel that this trend should continue. During the past fiscal year, SERVICEMASTER GLOBAL HLDGS increased its bottom line by earning $1.19 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.19).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 39.3% when compared to the same quarter one year prior, rising from $28.00 million to $39.00 million.

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