Today's Roof Leaker Stock Is Cisco Systems (CSCO)
Trade-Ideas LLC identified Cisco Systems ( CSCO) 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 Cisco Systems as such a stock due to the following factors:
- CSCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $609.3 million.
- CSCO has traded 2.6 million shares today.
- CSCO is trading at 2.05 times the normal volume for the stock at this time of day.
- CSCO 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 CSCO: Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide. The stock currently has a dividend yield of 3.8%. CSCO has a PE ratio of 16. Currently there are 16 analysts that rate Cisco Systems a buy, 1 analyst rates it a sell, and 8 rate it a hold. The average volume for Cisco Systems has been 25.7 million shares per day over the past 30 days. Cisco Systems has a market cap of $138.3 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.19 and a short float of 0.9% with 1.96 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Monday.
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Analysis:
rates Cisco Systems as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels, expanding profit margins and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Communications Equipment industry and the overall market, CISCO SYSTEMS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 65.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.39% is above that of the industry average.
- CISCO SYSTEMS INC has improved earnings per share by 34.8% 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, CISCO SYSTEMS INC increased its bottom line by earning $1.73 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus $1.73).
- You can view the full Cisco Systems Ratings Report.
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