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 Aflac ( AFL) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Aflac as such a stock due to the following factors:
- AFL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $119.0 million.
- AFL has traded 1.4 million shares today.
- AFL traded in a range 251.7% of the normal price range with a price range of $1.92.
- AFL traded below its daily resistance level (quality: 59 days, meaning that the stock is crossing a resistance level set by the last 59 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower. EXCLUSIVE OFFER: Get the inside scoop on opportunities in AFL with the Ticky from Trade-Ideas. See the FREE profile for AFL NOW at Trade-Ideas More details on AFL: Aflac Incorporated, through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance products. The stock currently has a dividend yield of 2.2%. AFL has a PE ratio of 10.1. Currently there are 9 analysts that rate Aflac a buy, no analysts rate it a sell, and 8 rate it a hold. The average volume for Aflac has been 1.9 million shares per day over the past 30 days. Aflac has a market cap of $30.7 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.73 and a short float of 1.1% with 2.69 days to cover. Shares are down 1% year-to-date as of the close of trading on Friday. 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 Aflac as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, increase in stock price during the past year 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:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Insurance industry and the overall market, AFLAC INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- AFLAC INC's earnings per share declined by 30.6% 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, AFLAC INC increased its bottom line by earning $6.11 versus $4.13 in the prior year. This year, the market expects an improvement in earnings ($6.18 versus $6.11).
- AFL, with its decline in revenue, slightly underperformed the industry average of 9.0%. Since the same quarter one year prior, revenues fell by 14.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- You can view the full Aflac 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.