Whitewave Foods Company (WWAV) Falls Further As It's Water-Logged And Getting Wetter

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 Whitewave Foods Company ( WWAV) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Whitewave Foods Company as such a stock due to the following factors:

  • WWAV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.0 million.
  • WWAV has traded 1.6 million shares today.
  • WWAV traded in a range 425.3% of the normal price range with a price range of $2.39.
  • WWAV traded below its daily resistance level (quality: 61 days, meaning that the stock is crossing a resistance level set by the last 61 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on WWAV:

The WhiteWave Foods Company, a consumer packaged food and beverage company, manufactures, markets, distributes, and sells branded plant-based foods and beverages, coffee creamers and beverages, dairy, and organic greens and produce products in North America and Europe. WWAV has a PE ratio of 51.0. Currently there are 9 analysts that rate Whitewave Foods Company a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Whitewave Foods Company has been 1.5 million shares per day over the past 30 days. Whitewave has a market cap of $5.4 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 35.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Whitewave Foods Company as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 36.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WHITEWAVE FOODS CO has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WHITEWAVE FOODS CO increased its bottom line by earning $0.56 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.56).
  • Powered by its strong earnings growth of 28.57% and other important driving factors, this stock has surged by 86.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 36.18% is the gross profit margin for WHITEWAVE FOODS CO which we consider to be strong. Regardless of WWAV'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 3.89% trails the industry average.
  • The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, WWAV has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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