JetBlue Airways (JBLU) Roof Leaking 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 JetBlue Airways ( JBLU) 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 JetBlue Airways as such a stock due to the following factors:

  • JBLU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.4 million.
  • JBLU has traded 4.3 million shares today.
  • JBLU is trading at 1.72 times the normal volume for the stock at this time of day.
  • JBLU 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.

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More details on JBLU:

JetBlue Airways Corporation, a passenger carrier company, provides air transportation services in the United States, the Caribbean, and Latin America. JBLU has a PE ratio of 17.0. Currently there are 2 analysts that rate JetBlue Airways a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for JetBlue Airways has been 6.8 million shares per day over the past 30 days. JetBlue Airways has a market cap of $2.5 billion and is part of the services sector and transportation industry. The stock has a beta of 0.59 and a short float of 22.7% with 5.68 days to cover. Shares are down 7.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates JetBlue Airways as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.6%. Since the same quarter one year prior, revenues slightly increased by 3.8%. 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.
  • 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.
  • JETBLUE AIRWAYS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, JETBLUE AIRWAYS CORP increased its bottom line by earning $0.51 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.51).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Airlines industry average, but is less than that of the S&P 500. The net income has significantly decreased by 71.4% when compared to the same quarter one year ago, falling from $14.00 million to $4.00 million.
  • 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 Airlines industry and the overall market, JETBLUE AIRWAYS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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