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 Realty Income Corporation ( O) 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 Realty Income Corporation as such a stock due to the following factors:
- O has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.0 million.
- O has traded 2.2 million shares today.
- O is trading at 2.37 times the normal volume for the stock at this time of day.
- O 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 O with the Ticky from Trade-Ideas. See the FREE profile for O NOW at Trade-Ideas More details on O: Realty Income Corporation is a publicly traded real estate investment trust. It invests in the real estate markets of the United States. The firm makes investments in commercial real estate. Realty Income Corporation was founded in 1969 and is based in Escondido, California. The stock currently has a dividend yield of 5%. O has a PE ratio of 61.5. Currently there are 6 analysts that rate Realty Income Corporation a buy, no analysts rate it a sell, and 6 rate it a hold. The average volume for Realty Income Corporation has been 2.1 million shares per day over the past 30 days. Realty Income has a market cap of $9.1 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.54 and a short float of 16.2% with 11.78 days to cover. Shares are up 16.9% year-to-date as of the close of trading on Thursday. 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 Realty Income Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- O's very impressive revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues leaped by 62.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 64.9% when compared to the same quarter one year prior, rising from $39.02 million to $64.34 million.
- Net operating cash flow has increased to $173.24 million or 46.88% when compared to the same quarter last year. In addition, REALTY INCOME CORP has also vastly surpassed the industry average cash flow growth rate of -54.21%.
- REALTY INCOME CORP has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, REALTY INCOME CORP reported lower earnings of $0.71 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.71).
- 46.77% is the gross profit margin for REALTY INCOME CORP which we consider to be strong. Regardless of O's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, O's net profit margin of 29.82% compares favorably to the industry average.
- You can view the full Realty Income Corporation 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.