Watch Out: Barbarians At The Gate For First Niagara Financial Group (FNFG)

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 First Niagara Financial Group ( FNFG) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified First Niagara Financial Group as such a stock due to the following factors:

  • FNFG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.2 million.
  • FNFG has traded 5.1 million shares today.
  • FNFG traded in a range 230% of the normal price range with a price range of $0.29.
  • FNFG traded above its daily resistance level (quality: 94 days, meaning that the stock is crossing a resistance level set by the last 94 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on FNFG:

First Niagara Financial Group, Inc. operates as the bank holding company for First Niagara Bank, N.A. that provides retail and commercial banking, and other financial services to individuals, families, and businesses. The stock currently has a dividend yield of 3.7%. FNFG has a PE ratio of 11.8. Currently there is 1 analyst that rates First Niagara Financial Group a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for First Niagara Financial Group has been 2.6 million shares per day over the past 30 days. First Niagara Financial Group has a market cap of $3.1 billion and is part of the financial sector and banking industry. The stock has a beta of 1.13 and a short float of 1.2% with 2.73 days to cover. Shares are down 17.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates First Niagara Financial Group as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, expanding profit margins, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 3.7% when compared to the same quarter one year prior, going from $71.13 million to $73.79 million.
  • The gross profit margin for FIRST NIAGARA FINANCIAL GRP is currently very high, coming in at 86.21%. Regardless of FNFG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FNFG's net profit margin of 19.28% compares favorably to the industry average.
  • Despite the weak revenue results, FNFG has outperformed against the industry average of 12.9%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • FIRST NIAGARA FINANCIAL GRP has improved earnings per share by 5.5% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FIRST NIAGARA FINANCIAL GRP increased its bottom line by earning $0.75 versus $0.40 in the prior year. For the next year, the market is expecting a contraction of 6.7% in earnings ($0.70 versus $0.75).

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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