Essex Property (ESS) Showing Signs Of Being 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 Essex Property ( ESS) 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 Essex Property as such a stock due to the following factors:

  • ESS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.1 million.
  • ESS has traded 156,652 shares today.
  • ESS traded in a range 204.7% of the normal price range with a price range of $4.14.
  • ESS traded below its daily resistance level (quality: 70 days, meaning that the stock is crossing a resistance level set by the last 70 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 ESS:

Essex Property Trust, Inc. operates as a self-administered and self-managed real estate investment trust in the United States. It engages in the ownership, operation, management, acquisition, development, and redevelopment of apartment communities, as well as commercial properties. The stock currently has a dividend yield of 2.7%. ESS has a PE ratio of 76.9. Currently there are 6 analysts that rate Essex Property a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Essex Property has been 333,600 shares per day over the past 30 days. Essex Property has a market cap of $12.1 billion and is part of the financial sector and real estate industry. The stock has a beta of 1.08 and a short float of 2.9% with 3.35 days to cover. Shares are up 31.9% 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 Essex Property as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations 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:
  • ESS's very impressive revenue growth greatly exceeded the industry average of 10.6%. Since the same quarter one year prior, revenues leaped by 67.4%. 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 its closing price of one year ago, ESS's share price has jumped by 35.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ESS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $96.18 million or 48.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.00%.
  • ESSEX PROPERTY TRUST 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ESSEX PROPERTY TRUST increased its bottom line by earning $3.24 versus $3.09 in the prior year. For the next year, the market is expecting a contraction of 59.7% in earnings ($1.31 versus $3.24).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 76.0% when compared to the same quarter one year ago, falling from $26.31 million to $6.30 million.

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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