Xcel Energy (XEL) Showing Signs Of Being A Roof Leaker

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 Xcel Energy ( XEL) 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 Xcel Energy as such a stock due to the following factors:

  • XEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $113.1 million.
  • XEL has traded 1.3 million shares today.
  • XEL is trading at 2.23 times the normal volume for the stock at this time of day.
  • XEL 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.

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More details on XEL:

Xcel Energy Inc., through its subsidiaries, engages primarily in the generation, purchase, transmission, distribution, and sale of electricity in the United States. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The stock currently has a dividend yield of 3.7%. XEL has a PE ratio of 19. Currently there are 6 analysts that rate Xcel Energy a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Xcel Energy has been 3.1 million shares per day over the past 30 days. Xcel Energy has a market cap of $17.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.19 and a short float of 1.8% with 2.93 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Xcel Energy as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 66.26% to $985.39 million when compared to the same quarter last year. In addition, XCEL ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 10.54%.
  • XCEL ENERGY INC's earnings per share declined by 42.3% 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, XCEL ENERGY INC increased its bottom line by earning $2.03 versus $1.91 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $2.03).
  • XEL, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. 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 gross profit margin for XCEL ENERGY INC is currently lower than what is desirable, coming in at 25.43%. Regardless of XEL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.13% trails the industry average.

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