Today's Roof Leaker Stock Is Mondelez International Inc Class A (MDLZ)

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 Mondelez International Inc Class A ( MDLZ) 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 Mondelez International Inc Class A as such a stock due to the following factors:

  • MDLZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $284.4 million.
  • MDLZ has traded 1.1 million shares today.
  • MDLZ is trading at 2.14 times the normal volume for the stock at this time of day.
  • MDLZ 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 MDLZ:

Mondelez International, Inc., through its subsidiaries, manufactures and markets snack food and beverage products worldwide. The stock currently has a dividend yield of 1.6%. MDLZ has a PE ratio of 33.3. Currently there are 8 analysts that rate Mondelez International Inc Class A a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Mondelez International Inc Class A has been 6.8 million shares per day over the past 30 days. Mondelez International Inc Class A has a market cap of $60.8 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.70 and a short float of 0.8% with 1.53 days to cover. Shares are up 1% year-to-date as of the close of trading on Wednesday.

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 Mondelez International Inc Class A as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • MONDELEZ INTERNATIONAL INC 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, MONDELEZ INTERNATIONAL INC increased its bottom line by earning $1.29 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $1.29).
  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that MDLZ's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • 39.49% is the gross profit margin for MONDELEZ INTERNATIONAL INC which we consider to be strong. Regardless of MDLZ'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 1.88% trails the industry average.
  • MDLZ, with its decline in revenue, slightly underperformed the industry average of 4.1%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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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