Trade-Ideas: Western Union (WU) Is Today's "Water-Logged And Getting Wetter" Stock
Trade-Ideas LLC identified Western Union ( WU) 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 Western Union as such a stock due to the following factors:
- WU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $81.6 million.
- WU has traded 582,257 shares today.
- WU traded in a range 297% of the normal price range with a price range of $0.86.
- WU traded below its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 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.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in WU with the Ticky from Trade-Ideas. See the FREE profile for WU NOW at Trade-Ideas
More details on WU: The Western Union Company provides money movement and payment services worldwide. The company operates in three segments: Consumer-to-Consumer, Consumer-to-Business, and Business Solutions. The Consumer-to-Consumer segment offers money transfer services. The stock currently has a dividend yield of 3.2%. WU has a PE ratio of 12. Currently there are 3 analysts that rate Western Union a buy, 4 analysts rate it a sell, and 13 rate it a hold. The average volume for Western Union has been 5.0 million shares per day over the past 30 days. Western Union has a market cap of $10.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.04 and a short float of 13.8% with 13.83 days to cover. Shares are up 10.7% year-to-date as of the close of trading on Tuesday.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
Analysis:
rates Western Union as a
. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins 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:
- WESTERN UNION CO reported flat earnings per share in the most recent quarter. 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, WESTERN UNION CO increased its bottom line by earning $1.62 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $1.62).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- 46.30% is the gross profit margin for WESTERN UNION CO which we consider to be strong. Regardless of WU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WU's net profit margin of 15.38% compares favorably to the industry average.
- After a year of stock price fluctuations, the net result is that WU's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full Western Union Ratings Report.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
