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 Eastman Chemical as such a stock due to the following factors:
- EMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $90.2 million.
- EMN has traded 961,101 shares today.
- EMN is trading at 22.47 times the normal volume for the stock at this time of day.
- EMN 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 EMN:
Eastman Chemical Company, a specialty chemical company, manufactures and sells chemicals, plastics, and fibers in the United States and internationally. The stock currently has a dividend yield of 1.6%. EMN has a PE ratio of 12.0. Currently there are 11 analysts that rate Eastman Chemical a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for Eastman Chemical has been 999,300 shares per day over the past 30 days. Eastman Chemical has a market cap of $13.3 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.78 and a short float of 1.4% with 2.09 days to cover. Shares are up 9.9% year-to-date as of the close of trading on Monday.
rates Eastman Chemical as a
. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Chemicals industry and the overall market, EASTMAN CHEMICAL CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- EASTMAN CHEMICAL CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EASTMAN CHEMICAL CO increased its bottom line by earning $7.45 versus $3.03 in the prior year. For the next year, the market is expecting a contraction of 7.0% in earnings ($6.93 versus $7.45).
- EMN, with its decline in revenue, slightly underperformed the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full Eastman Chemical Ratings Report.