KAR Auction Services (KAR) provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA and AFC. KAR Auction Services trades an average of 1.7 million shares per day with a market cap of $4.3 billion.
Price To Book: 2.8
While KAR Auction Services beat the last earnings estimate, it has a mixed record of meeting or beating market expectations. The company pays a $1 annualized dividend for a yield of 3.35, making it attractive to yield seekers.
The yield may not be high enough to support the risk of a reduction. Indeed, the company doesn't have a long record of dividend payments to reassure shareholders and the current payout ratio exceeds 75% of earnings.
I don't think KAR's fundamentals are bad, but technically, the stock appears ready for a breakdown. A couple of weeks ago, the 200 day moving average was tested. The first test usually doesn't "stick", but they're usually followed by further price weakness and testing of the average. You don't want to be holding long when that happens.
On the daily chart, the shares are about to run into resistance and my own proprietary exhaustion point inspired by DeMark market timing indicators. Blue ellipses highlight both areas in the chart above.