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 Mattel as such a stock due to the following factors:
- MAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $158.2 million.
- MAT has traded 2.8 million shares today.
- MAT is trading at 1.92 times the normal volume for the stock at this time of day.
- MAT 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 MAT:
Mattel, Inc., together with its subsidiaries, designs, manufactures, and markets various toy products. The company operates in three segments: North America, International, and American Girl. Its products comprise fashion dolls and accessories, vehicles and play sets, and games and puzzles. The stock currently has a dividend yield of 3.4%. MAT has a PE ratio of 19.1. Currently there are 7 analysts that rate Mattel a buy, no analysts rate it a sell, and 4 rate it a hold.
The average volume for Mattel has been 2.4 million shares per day over the past 30 days. Mattel has a market cap of $14.7 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.53 and a short float of 2.2% with 2.06 days to cover. Shares are up 16.7% year to date as of the close of trading on Friday.
rates Mattel as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- MAT's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MATTEL INC has improved earnings per share by 16.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, MATTEL INC's EPS of $2.21 remained unchanged from the prior years' EPS of $2.21. This year, the market expects an improvement in earnings ($2.73 versus $2.21).
- The net income growth from the same quarter one year ago has exceeded that of the Leisure Equipment & Products industry average, but is less than that of the S&P 500. The net income increased by 15.5% when compared to the same quarter one year prior, going from $365.94 million to $422.80 million.
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that MAT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.56 is high and demonstrates strong liquidity.
- 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 Mattel Ratings Report.