Today's Water-Logged And Getting Wetter Stock: Senior Housing Properties (SNH)

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 Senior Housing Properties ( SNH) 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 Senior Housing Properties as such a stock due to the following factors:

  • SNH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.5 million.
  • SNH has traded 5.5 million shares today.
  • SNH traded in a range 284.7% of the normal price range with a price range of $0.97.
  • SNH traded below its daily resistance level (quality: 532 days, meaning that the stock is crossing a resistance level set by the last 532 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 SNH:

Senior Housing Properties Trust, a real estate investment trust (REIT), primarily invests in senior housing properties in the United States. The trust invests in hospitals, nursing homes, senior apartments, independent living properties, and assisted living properties. The stock currently has a dividend yield of 8.2%. SNH has a PE ratio of 24. Currently there are no analysts that rate Senior Housing Properties a buy, 4 analysts rate it a sell, and 3 rate it a hold.

The average volume for Senior Housing Properties has been 2.1 million shares per day over the past 30 days. Senior Housing has a market cap of $4.5 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.36 and a short float of 3.7% with 2.73 days to cover. Shares are down 12.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Senior Housing Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 19.4%. 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 increased to $104.14 million or 15.55% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.76%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 3.1% when compared to the same quarter one year prior, going from $38.58 million to $39.79 million.
  • SENIOR HOUSING PPTYS TRUST's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SENIOR HOUSING PPTYS TRUST reported lower earnings of $0.81 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.81).

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