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 PPL as such a stock due to the following factors:
- PPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.5 million.
- PPL has traded 784,078 shares today.
- PPL is trading at 4.43 times the normal volume for the stock at this time of day.
- PPL 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 PPL:
PPL Corporation, an energy and utility holding company, generates, transmits, distributes, and sells electricity to wholesale and retail customers in the Pennsylvania, Kentucky, Virginia, Tennessee, and the United Kingdom. The company operates in four segments: Kentucky Regulated, U.K. The stock currently has a dividend yield of 4.6%. PPL has a PE ratio of 24.9. Currently there are 5 analysts that rate PPL a buy, no analysts rate it a sell, and 7 rate it a hold.
The average volume for PPL has been 3.7 million shares per day over the past 30 days. PPL has a market cap of $22.3 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.37 and a short float of 2.2% with 3.23 days to cover. Shares are up 11.6% year-to-date as of the close of trading on Tuesday.
rates PPL as a
. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- 36.85% is the gross profit margin for PPL CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.96% trails the industry average.
- PPL CORP's earnings per share declined by 46.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PPL CORP reported lower earnings of $1.74 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($2.28 versus $1.74).
- PPL, with its decline in revenue, underperformed when compared the industry average of 5.4%. Since the same quarter one year prior, revenues fell by 17.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Net operating cash flow has declined marginally to $652.00 million or 7.25% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PPL CORP has marginally lower results.
- You can view the full PPL Ratings Report.