WR Berkley (WRB) 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 WR Berkley ( WRB) 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 WR Berkley as such a stock due to the following factors:

  • WRB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.0 million.
  • WRB has traded 393,359 shares today.
  • WRB traded in a range 213.3% of the normal price range with a price range of $1.22.
  • WRB traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 WRB:

W. R. Berkley Corporation, an insurance holding company, operates as commercial lines writers primarily in the United States. The company operates in three segments: Insurance-Domestic, Insurance-International, and Reinsurance-Global. The stock currently has a dividend yield of 1%. WRB has a PE ratio of 11. Currently there is 1 analyst that rates WR Berkley a buy, 3 analysts rate it a sell, and 3 rate it a hold.

The average volume for WR Berkley has been 540,800 shares per day over the past 30 days. WR Berkley has a market cap of $6.1 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.04 and a short float of 5.1% with 7.39 days to cover. Shares are down 4.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WR Berkley as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 2.2%. 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.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, BERKLEY (W R) CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • BERKLEY (W R) CORP's earnings per share declined by 28.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BERKLEY (W R) CORP increased its bottom line by earning $4.85 versus $3.55 in the prior year. For the next year, the market is expecting a contraction of 27.2% in earnings ($3.53 versus $4.85).

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