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 Fifth Third Bancorp ( FITB) 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 Fifth Third Bancorp as such a stock due to the following factors:
- FITB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $191.0 million.
- FITB has traded 2.1 million shares today.
- FITB is trading at 2.89 times the normal volume for the stock at this time of day.
- FITB 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 FITB with the Ticky from Trade-Ideas. See the FREE profile for FITB NOW at Trade-Ideas More details on FITB: Fifth Third Bancorp operates as a diversified financial services company in the United States. It operates through four segments: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. The stock currently has a dividend yield of 2.3%. FITB has a PE ratio of 10.8. Currently there are 9 analysts that rate Fifth Third Bancorp a buy, 1 analyst rates it a sell, and 10 rate it a hold. The average volume for Fifth Third Bancorp has been 8.4 million shares per day over the past 30 days. Fifth Third has a market cap of $17.6 billion and is part of the financial sector and banking industry. The stock has a beta of 1.30 and a short float of 1.4% with 1.29 days to cover. Shares are down 2% 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 Fifth Third Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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:
- 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 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 Commercial Banks industry and the overall market on the basis of return on equity, FIFTH THIRD BANCORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for FIFTH THIRD BANCORP is currently very high, coming in at 89.15%. Regardless of FITB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FITB's net profit margin of 20.42% compares favorably to the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 10.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- FIFTH THIRD BANCORP's earnings per share declined by 21.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FIFTH THIRD BANCORP increased its bottom line by earning $2.01 versus $1.66 in the prior year. For the next year, the market is expecting a contraction of 15.4% in earnings ($1.70 versus $2.01).
- You can view the full Fifth Third Bancorp 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.