Stock To Watch: Arkansas Best Corporation (ABFS) In Perilous Reversal

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 Arkansas Best Corporation ( ABFS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Arkansas Best Corporation as such a stock due to the following factors:

  • ABFS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.9 million.
  • ABFS has traded 1.4 million shares today.
  • ABFS is down 3.1% today.
  • ABFS was up 6.2% yesterday.

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More details on ABFS:

Arkansas Best Corporation, through its subsidiaries, provides freight transportation services and solutions. The stock currently has a dividend yield of 0.5%. Currently there are 2 analysts that rate Arkansas Best Corporation a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Arkansas Best Corporation has been 488,700 shares per day over the past 30 days. Arkansas Best has a market cap of $659.2 million and is part of the services sector and transportation industry. The stock has a beta of 1.41 and a short float of 12.1% with 4.14 days to cover. Shares are up 168.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Arkansas Best Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 13.0%. 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.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Road & Rail industry and the overall market, ARKANSAS BEST CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ARKANSAS BEST CORP is currently extremely low, coming in at 5.23%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.84% significantly trails the industry average.

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