Swift Transportation (SWFT) Shows Signs Of Being Water-Logged And Getting Wetter

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 Swift Transportation ( SWFT) 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 Swift Transportation as such a stock due to the following factors:

  • SWFT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.2 million.
  • SWFT has traded 1.7 million shares today.
  • SWFT traded in a range 258.1% of the normal price range with a price range of $1.45.
  • SWFT traded below its daily resistance level (quality: 246 days, meaning that the stock is crossing a resistance level set by the last 246 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 SWFT:

Swift Transportation Company operates as a multi-faceted transportation services company in North America. The company operates through four segments: Truckload, Dedicated, Central Refrigerated, and Intermodal. SWFT has a PE ratio of 18. Currently there are 13 analysts that rate Swift Transportation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Swift Transportation has been 2.1 million shares per day over the past 30 days. Swift Transportation has a market cap of $2.2 billion and is part of the services sector and transportation industry. The stock has a beta of 2.61 and a short float of 14.8% with 7.38 days to cover. Shares are down 17.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Swift Transportation as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • SWIFT TRANSPORTATION CO reported significant earnings per share improvement 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 two years. We feel that this trend should continue. During the past fiscal year, SWIFT TRANSPORTATION CO increased its bottom line by earning $1.13 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.13).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 207.5% when compared to the same quarter one year prior, rising from $12.31 million to $37.84 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 0.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 68.28% to $128.16 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 23.58%.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Road & Rail industry and the overall market, SWIFT TRANSPORTATION CO's return on equity significantly exceeds that of both the industry average and the S&P 500.

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