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 Weyerhaeuser as such a stock due to the following factors:
- WY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.7 million.
- WY has traded 1.9 million shares today.
- WY is trading at 1.84 times the normal volume for the stock at this time of day.
- WY 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 WY:
Weyerhaeuser Company, a forest products company, grows and harvests trees, builds homes, and manufactures forest products worldwide. It grows and harvests trees for use as lumber, other wood and building products, and pulp and paper. The stock currently has a dividend yield of 2.9%. WY has a PE ratio of 31.5. Currently there are 6 analysts that rate Weyerhaeuser a buy, 2 analysts rate it a sell, and 2 rate it a hold.
The average volume for Weyerhaeuser has been 3.4 million shares per day over the past 30 days. Weyerhaeuser has a market cap of $17.5 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.35 and a short float of 1.4% with 2.47 days to cover. Shares are down 5.5% year-to-date as of the close of trading on Wednesday.
rates Weyerhaeuser as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations 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:
- WY's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 12.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $348.00 million or 38.09% when compared to the same quarter last year. In addition, WEYERHAEUSER CO has also vastly surpassed the industry average cash flow growth rate of -76.73%.
- WEYERHAEUSER CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, WEYERHAEUSER CO increased its bottom line by earning $0.95 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.95).
- In its most recent trading session, WY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 62.2% when compared to the same quarter one year ago, falling from $143.00 million to $54.00 million.
- You can view the full Weyerhaeuser Ratings Report.