Today's Roof Leaker Stock Is SBA Communications (SBAC)

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 SBA Communications ( SBAC) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified SBA Communications as such a stock due to the following factors:

  • SBAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $78.6 million.
  • SBAC has traded 114,293 shares today.
  • SBAC is trading at 2.11 times the normal volume for the stock at this time of day.
  • SBAC crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SBAC with the Ticky from Trade-Ideas. See the FREE profile for SBAC NOW at Trade-Ideas

More details on SBAC:

SBA Communications Corporation owns and operates wireless communications tower structures, rooftops, and other structures that support antennas used for wireless communications in the United States and its territories, Canada, Central America, and Brazil. Currently there are 11 analysts that rate SBA Communications a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for SBA Communications has been 893,400 shares per day over the past 30 days. SBA has a market cap of $15.3 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.51 and a short float of 1.6% with 2.82 days to cover. Shares are up 5.1% year-to-date as of the close of trading on Tuesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SBA Communications as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth significantly trails the industry average of 65.0%. Since the same quarter one year prior, revenues rose by 18.7%. 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.
  • The gross profit margin for SBA COMMUNICATIONS CORP is currently very high, coming in at 72.91%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -19.27% is in-line with the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Net operating cash flow has declined marginally to $178.41 million or 0.31% when compared to the same quarter last year. Despite a decrease in cash flow SBA COMMUNICATIONS CORP is still fairing well by exceeding its industry average cash flow growth rate of -42.14%.
  • 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 5716.9% when compared to the same quarter one year ago, falling from $1.41 million to -$79.03 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

Dow Posts First Gain in Nine Sessions; Oil Jumps

Dow Posts First Gain in Nine Sessions; Oil Jumps