Tenneco (TEN) Marked As A Barbarian At The Gate

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 Tenneco ( TEN) 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 Tenneco as such a stock due to the following factors:

  • TEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.4 million.
  • TEN has traded 203,976 shares today.
  • TEN traded in a range 210.8% of the normal price range with a price range of $1.77.
  • TEN traded above its daily resistance level (quality: 17 days, meaning that the stock is crossing a resistance level set by the last 17 calendar days. 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 TEN:

Tenneco Inc. designs, manufactures, and sells clean air and ride performance products and systems for light vehicle, commercial truck, off-highway, and other vehicle applications worldwide. TEN has a PE ratio of 16. Currently there are 9 analysts that rate Tenneco a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Tenneco has been 489,800 shares per day over the past 30 days. Tenneco has a market cap of $3.6 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.32 and a short float of 2.9% with 5.41 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tenneco as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • TENNECO INC has improved earnings per share by 6.7% 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 year. We feel that this trend should continue. During the past fiscal year, TENNECO INC increased its bottom line by earning $3.67 versus $2.97 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $3.67).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Auto Components industry average. The net income increased by 6.5% when compared to the same quarter one year prior, going from $46.00 million to $49.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Auto Components industry and the overall market, TENNECO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 64.28% to -$50.00 million when compared to the same quarter last year. In addition, TENNECO INC has also vastly surpassed the industry average cash flow growth rate of -32.89%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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