AmTrust Financial Services (AFSI) 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 AmTrust Financial Services ( AFSI) 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 AmTrust Financial Services as such a stock due to the following factors:

  • AFSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.3 million.
  • AFSI has traded 515,809 shares today.
  • AFSI traded in a range 224.2% of the normal price range with a price range of $4.01.
  • AFSI traded below its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 AFSI:

AmTrust Financial Services, Inc., through its subsidiaries, underwrites and provides property and casualty insurance in the United States and internationally. The stock currently has a dividend yield of 1.9%. AFSI has a PE ratio of 9.4. Currently there are 5 analysts that rate AmTrust Financial Services a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for AmTrust Financial Services has been 972,400 shares per day over the past 30 days. AmTrust Financial Services has a market cap of $3.9 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.01 and a short float of 23.7% with 9.55 days to cover. Shares are up 63.7% 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 AmTrust Financial Services as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 22.0%. Since the same quarter one year prior, revenues rose by 46.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AMTRUST FINANCIAL SERVICES reported significant earnings per share improvement 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. We feel that this trend should continue. During the past fiscal year, AMTRUST FINANCIAL SERVICES increased its bottom line by earning $3.49 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($5.45 versus $3.49).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 165.6% when compared to the same quarter one year prior, rising from $60.29 million to $160.10 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Insurance industry and the overall market, AMTRUST FINANCIAL SERVICES's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

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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