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 Steel Dynamics as such a stock due to the following factors:
- STLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.2 million.
- STLD has traded 146,855 shares today.
- STLD is trading at 6.11 times the normal volume for the stock at this time of day.
- STLD 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 STLD:
Steel Dynamics, Inc., together with its subsidiaries, produces and sells steel products in the United States and internationally. The company operates in three segments: Steel Operations, Metals Recycling and Ferrous Resources Operations, and Steel Fabrication Operations. The stock currently has a dividend yield of 2.6%. STLD has a PE ratio of 19.9. Currently there are 9 analysts that rate Steel Dynamics a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Steel Dynamics has been 2.0 million shares per day over the past 30 days. Steel Dynamics has a market cap of $3.8 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.10 and a short float of 1.9% with 1.42 days to cover. Shares are down 15.7% year-to-date as of the close of trading on Monday.
rates Steel Dynamics as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- STLD's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 347.9% when compared to the same quarter one year prior, rising from $12.83 million to $57.49 million.
- Net operating cash flow has significantly increased by 56.14% to $183.27 million when compared to the same quarter last year. In addition, STEEL DYNAMICS INC has also vastly surpassed the industry average cash flow growth rate of -4.59%.
- 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 Metals & Mining industry and the overall market on the basis of return on equity, STEEL DYNAMICS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- STEEL DYNAMICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STEEL DYNAMICS INC reported lower earnings of $0.73 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.73).
- You can view the full Steel Dynamics Ratings Report.