Trade-Ideas: Swift Transportation (SWFT) Is Today's

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 Swift Transportation ( SWFT) 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 Swift Transportation as such a stock due to the following factors:

  • SWFT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.6 million.
  • SWFT has traded 1.5 million shares today.
  • SWFT traded in a range 203.3% of the normal price range with a price range of $1.00.
  • SWFT traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 SWFT:

Swift Transportation Company operates as a multi-faceted transportation services company in North America. The company operates through four segments: Truckload, Dedicated, Central Refrigerated, and Intermodal. SWFT has a PE ratio of 21.9. Currently there are 11 analysts that rate Swift Transportation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Swift Transportation has been 1.8 million shares per day over the past 30 days. Swift Transportation has a market cap of $1.8 billion and is part of the services sector and transportation industry. The stock has a beta of 2.67 and a short float of 22.3% with 6.75 days to cover. Shares are down 13.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Swift Transportation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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.
  • SWIFT TRANSPORTATION CO's earnings per share declined by 22.2% in the most recent quarter compared to 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, SWIFT TRANSPORTATION CO increased its bottom line by earning $1.10 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.27 versus $1.10).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Road & Rail industry and the overall market, SWIFT TRANSPORTATION CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is very high at 4.37 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SWFT's quick ratio is somewhat strong at 1.44, demonstrating the ability to handle short-term liquidity needs.

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