Sealed Air Corporation (SEE) Marked As A Barbarian At The Gate

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 Sealed Air Corporation ( SEE) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sealed Air Corporation as such a stock due to the following factors:

  • SEE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.3 million.
  • SEE has traded 1.4 million shares today.
  • SEE traded in a range 234.8% of the normal price range with a price range of $1.24.
  • SEE traded above its daily resistance level (quality: 85 days, meaning that the stock is crossing a resistance level set by the last 85 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on SEE:

Sealed Air Corporation, through its subsidiaries, provides food safety and security, facility hygiene, and product protection solutions worldwide. The company operates through three segments: Food & Beverage (F&B), Institutional & Laundry (I&L), and Protective Packaging. The stock currently has a dividend yield of 1.9%. Currently there are 6 analysts that rate Sealed Air Corporation a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Sealed Air Corporation has been 2.1 million shares per day over the past 30 days. Sealed Air has a market cap of $5.3 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.31 and a short float of 3.5% with 5.01 days to cover. Shares are up 55.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sealed Air Corporation as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Containers & Packaging industry. The net income increased by 514.0% when compared to the same quarter one year prior, rising from -$13.60 million to $56.30 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 1.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SEALED AIR CORP reported significant earnings per share improvement in the most recent quarter compared to 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, SEALED AIR CORP swung to a loss, reporting -$8.33 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus -$8.33).
  • The debt-to-equity ratio is very high at 3.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SEE maintains a poor quick ratio of 0.79, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Containers & Packaging industry and the overall market, SEALED AIR CORP's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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