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.

Trade-Ideas LLC identified Aecom ( ACM) 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 Aecom as such a stock due to the following factors:

  • ACM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.7 million.
  • ACM has traded 1.7 million shares today.
  • ACM traded in a range 222.2% of the normal price range with a price range of $1.52.
  • ACM traded below its daily resistance level (quality: 41 days, meaning that the stock is crossing a resistance level set by the last 41 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 ACM:

AECOM, together with its subsidiaries, provides professional technical and management support services for public and private clients worldwide. The company operates through two segments, Professional Technical Services (PTS) and Management Support Services (MSS). ACM has a PE ratio of 31.0. Currently there are 4 analysts that rate Aecom a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Aecom has been 1.5 million shares per day over the past 30 days. Aecom has a market cap of $4.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.19 and a short float of 3% with 4.20 days to cover. Shares are up 4.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Aecom as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • ACM's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 114.2%. 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.
  • Net operating cash flow has significantly increased by 105.72% to $282.64 million when compared to the same quarter last year. In addition, AECOM INC has also vastly surpassed the industry average cash flow growth rate of -124.25%.
  • AECOM 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AECOM INC reported lower earnings of $2.33 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.33).
  • 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 Construction & Engineering industry and the overall market on the basis of return on equity, AECOM INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • 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 Construction & Engineering industry. The net income has significantly decreased by 283.5% when compared to the same quarter one year ago, falling from $56.40 million to -$103.50 million.

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