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 GlaxoSmithKline ( GSK) 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 GlaxoSmithKline as such a stock due to the following factors:
- GSK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $128.4 million.
- GSK has traded 129,693 shares today.
- GSK is trading at 999999.00 times the normal volume for the stock at this time of day.
- GSK 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 GSK with the Ticky from Trade-Ideas. See the FREE profile for GSK NOW at Trade-Ideas More details on GSK: GlaxoSmithKline plc manufactures and markets pharmaceutical products, over-the-counter medicines, and health-related consumer products worldwide. The stock currently has a dividend yield of 4.5%. GSK has a PE ratio of 16.0. Currently there is 1 analyst that rates GlaxoSmithKline a buy, no analysts rate it a sell, and 6 rate it a hold. The average volume for GlaxoSmithKline has been 2.3 million shares per day over the past 30 days. GlaxoSmithKline has a market cap of $128.9 billion and is part of the health care sector and drugs industry. Shares are down 0.2% year-to-date as of the close of trading on Tuesday. 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 GlaxoSmithKline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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.
- Net operating cash flow has significantly increased by 1166.38% to $3,647.01 million when compared to the same quarter last year. In addition, GLAXOSMITHKLINE PLC has also vastly surpassed the industry average cash flow growth rate of -11.51%.
- 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.
- The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 68.78%. Regardless of GSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.80% trails the industry average.
- GLAXOSMITHKLINE PLC's earnings per share declined by 7.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC reported lower earnings of $2.94 versus $3.21 in the prior year. This year, the market expects an improvement in earnings ($3.68 versus $2.94).
- You can view the full GlaxoSmithKline 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.