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 Wells Fargo as such a stock due to the following factors:
- WFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $749.6 million.
- WFC has traded 2.0 million shares today.
- WFC is trading at 1.52 times the normal volume for the stock at this time of day.
- WFC 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 WFC:
Wells Fargo & Company provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The stock currently has a dividend yield of 2.7%. WFC has a PE ratio of 13. Currently there are 12 analysts that rate Wells Fargo a buy, no analysts rate it a sell, and 7 rate it a hold.
The average volume for Wells Fargo has been 17.8 million shares per day over the past 30 days. Wells Fargo has a market cap of $285.1 billion and is part of the financial sector and banking industry. The stock has a beta of 0.87 and a short float of 0.6% with 2.37 days to cover. Shares are up 1.4% year-to-date as of the close of trading on Monday.
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rates Wells Fargo as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, solid stock price performance, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- WFC's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WELLS FARGO & CO's earnings per share improvement from the most recent quarter was slightly positive. 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, WELLS FARGO & CO increased its bottom line by earning $4.10 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $4.10).
- After a year of stock price fluctuations, the net result is that WFC'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. 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.
- Net operating cash flow has increased to $18,937.00 million or 25.72% when compared to the same quarter last year. Despite an increase in cash flow of 25.72%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 312.99%.
- The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 92.60%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 25.35% trails the industry average.
- You can view the full Wells Fargo Ratings Report.