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 L Brands ( LB) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified L Brands as such a stock due to the following factors:
- LB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $110.3 million.
- LB has traded 93,416 shares today.
- LB is trading at 7.42 times the normal volume for the stock at this time of day.
- LB crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend. EXCLUSIVE OFFER: Get the inside scoop on opportunities in LB with the Ticky from Trade-Ideas. See the FREE profile for LB NOW at Trade-Ideas More details on LB: L Brands, Inc. operates as a specialty retailer of women's intimate and other apparel, beauty and personal care products, and accessories. The stock currently has a dividend yield of 2.1%. LB has a PE ratio of 20.7. Currently there are 11 analysts that rate L Brands a buy, 3 analysts rate it a sell, and 10 rate it a hold. The average volume for L Brands has been 1.6 million shares per day over the past 30 days. L has a market cap of $16.8 billion and is part of the services sector and retail industry. The stock has a beta of 0.76 and a short float of 4% with 4.93 days to cover. Shares are down 8.5% year-to-date as of the close of trading on Monday. 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 L Brands as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- L BRANDS INC has improved earnings per share by 24.0% 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, L BRANDS INC reported lower earnings of $2.54 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($3.18 versus $2.54).
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.89% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Net operating cash flow has significantly decreased to -$385.00 million or 196.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full L Brands 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.