Ralph Lauren (RL) Is Water-Logged And Getting Wetter Today

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 Ralph Lauren ( RL) 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 Ralph Lauren as such a stock due to the following factors:

  • RL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $90.5 million.
  • RL has traded 264,628 shares today.
  • RL traded in a range 203.8% of the normal price range with a price range of $4.37.
  • RL traded below its daily resistance level (quality: 68 days, meaning that the stock is crossing a resistance level set by the last 68 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.

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More details on RL:

Ralph Lauren Corporation engages in the design, marketing, and distribution of lifestyle products. The stock currently has a dividend yield of 1%. RL has a PE ratio of 22.0. Currently there are 8 analysts that rate Ralph Lauren a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Ralph Lauren has been 801,800 shares per day over the past 30 days. Ralph Lauren has a market cap of $10.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.25 and a short float of 1.1% with 1.58 days to cover. Shares are down 1.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ralph Lauren as a buy. 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, reasonable valuation levels, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • RL's revenue growth trails the industry average of 18.6%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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.
  • RL's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
  • RALPH LAUREN CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, RALPH LAUREN CORP increased its bottom line by earning $8.00 versus $7.13 in the prior year. This year, the market expects an improvement in earnings ($8.50 versus $8.00).
  • 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. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, RALPH LAUREN CORP has underperformed in comparison with the industry average, but has exceeded that of 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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