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 Foster Wheeler ( FWLT) 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 Foster Wheeler as such a stock due to the following factors:
- FWLT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.1 million.
- FWLT has traded 645,449 shares today.
- FWLT traded in a range 227.1% of the normal price range with a price range of $2.03.
- FWLT traded above its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in FWLT with the Ticky from Trade-Ideas. See the FREE profile for FWLT NOW at Trade-Ideas More details on FWLT: Foster Wheeler AG, through its subsidiaries, operates in engineering and construction, as well as power generating equipment businesses worldwide. FWLT has a PE ratio of 22.6. Currently there are 6 analysts that rate Foster Wheeler a buy, no analysts rate it a sell, and 6 rate it a hold. The average volume for Foster Wheeler has been 1.1 million shares per day over the past 30 days. Foster Wheeler has a market cap of $3.1 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 2.22 and a short float of 3.2% with 2.42 days to cover. Shares are up 28.2% year-to-date as of the close of trading on Wednesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Foster Wheeler 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins. Highlights from the ratings report include:
- FWLT's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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.
- FWLT's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.
- FOSTER WHEELER AG's earnings per share declined by 9.1% 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, FOSTER WHEELER AG increased its bottom line by earning $1.40 versus $1.35 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.40).
- The gross profit margin for FOSTER WHEELER AG is rather low; currently it is at 20.89%. Regardless of FWLT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FWLT's net profit margin of 6.31% compares favorably to the industry average.
- 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 Construction & Engineering industry. The net income has decreased by 13.1% when compared to the same quarter one year ago, dropping from $58.22 million to $50.61 million.
- You can view the full Foster Wheeler Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.