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 Macy's as such a stock due to the following factors:
- M has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $207.5 million.
- M has traded 4.5 million shares today.
- M is trading at 7.31 times the normal volume for the stock at this time of day.
- M 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 M:
Macy's, Inc., together with its subsidiaries, operates stores and Internet Websites in the United States. The stock currently has a dividend yield of 2.3%. M has a PE ratio of 12.7. Currently there are 8 analysts that rate Macy's a buy, no analysts rate it a sell, and 8 rate it a hold.
The average volume for Macy's has been 4.8 million shares per day over the past 30 days. Macy's has a market cap of $16.4 billion and is part of the services sector and retail industry. The stock has a beta of 0.58 and a short float of 2.2% with 1.79 days to cover. Shares are up 11.7% year to date as of the close of trading on Friday.
rates Macy's as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, reasonable valuation levels, increase in net income and increase in stock price during the past year. We feel these 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:
- MACY'S INC has improved earnings per share by 7.5% 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 two years. We feel that this trend should continue. During the past fiscal year, MACY'S INC increased its bottom line by earning $3.29 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($3.84 versus $3.29).
- 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. Compared to other companies in the Multiline Retail industry and the overall market, MACY'S INC's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 0.7% when compared to the same quarter one year prior, going from $279.00 million to $281.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- You can view the full Macy's Ratings Report.