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 Xerox Corporation as such a stock due to the following factors:
- XRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.3 million.
- XRX has traded 1.1 million shares today.
- XRX is trading at 2.82 times the normal volume for the stock at this time of day.
- XRX 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 XRX:
Xerox Corporation provides business process and document management solutions worldwide. The stock currently has a dividend yield of 2%. XRX has a PE ratio of 15.2. Currently there are 3 analysts that rate Xerox Corporation a buy, 1 analyst rates it a sell, and 2 rate it a hold.
The average volume for Xerox Corporation has been 6.6 million shares per day over the past 30 days. Xerox has a market cap of $15.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.35 and a short float of 0.8% with 1.60 days to cover. Shares are down 3.6% year-to-date as of the close of trading on Thursday.
rates Xerox Corporation as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.74% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, XRX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 38.19% is the gross profit margin for XEROX CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, XRX's net profit margin of 3.09% significantly trails the industry average.
- XEROX CORP's earnings per share improvement from the most recent quarter was slightly positive. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, XEROX CORP's EPS of $0.93 remained unchanged from the prior years' EPS of $0.93. This year, the market expects an improvement in earnings ($1.04 versus $0.93).
- The debt-to-equity ratio is somewhat low, currently at 0.70, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
- You can view the full Xerox Corporation Ratings Report.