Barbarian At The Gate: Axis Capital Holdings (AXS)

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 Axis Capital Holdings ( AXS) 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 Axis Capital Holdings as such a stock due to the following factors:

  • AXS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.6 million.
  • AXS has traded 471,822 shares today.
  • AXS traded in a range 281.9% of the normal price range with a price range of $1.89.
  • AXS traded above its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 AXS:

AXIS Capital Holdings Limited, together with its subsidiaries, provides insurance and treaty reinsurance products Worldwide. The company operates through Insurance and Reinsurance segments. The stock currently has a dividend yield of 2.2%. AXS has a PE ratio of 7. Currently there are 4 analysts that rate Axis Capital Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Axis Capital Holdings has been 786,800 shares per day over the past 30 days. Axis has a market cap of $5.4 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.53 and a short float of 1.4% with 1.23 days to cover. Shares are up 5.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Axis Capital Holdings as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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 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 Insurance industry average. The net income increased by 12.6% when compared to the same quarter one year prior, going from $147.25 million to $165.83 million.
  • AXS's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • 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, AXIS CAPITAL HOLDINGS LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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