Today's Water-Logged And Getting Wetter Stock: Aramark (ARMK)
Trade-Ideas LLC identified
(
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Aramark as such a stock due to the following factors:
- ARMK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.8 million.
- ARMK has traded 997,916 shares today.
- ARMK traded in a range 263% of the normal price range with a price range of $1.31.
- ARMK traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on ARMK:
Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally. The stock currently has a dividend yield of 1.1%. ARMK has a PE ratio of 34. Currently there are 7 analysts that rate Aramark a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Aramark has been 1.2 million shares per day over the past 30 days. Aramark has a market cap of $8.2 billion and is part of the services sector and leisure industry. Shares are up 6.5% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Aramark as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. 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:
- ARAMARK has improved earnings per share by 8.6% 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, ARAMARK increased its bottom line by earning $0.96 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $0.96).
- ARMK's revenue growth trails the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to -$195.33 million or 19.89% when compared to the same quarter last year. In addition, ARAMARK has also vastly surpassed the industry average cash flow growth rate of -73.96%.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
- 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 Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, ARAMARK has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full Aramark Ratings Report.
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