Water-Logged And Getting Wetter Stock Of The Day: Hertz Global Holdings (HTZ)

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 Hertz Global Holdings ( HTZ) 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 Hertz Global Holdings as such a stock due to the following factors:

  • HTZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.3 million.
  • HTZ has traded 5.9 million shares today.
  • HTZ traded in a range 209.6% of the normal price range with a price range of $1.02.
  • HTZ traded below its daily resistance level (quality: 41 days, meaning that the stock is crossing a resistance level set by the last 41 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 HTZ:

Hertz Global Holdings, Inc., through its subsidiaries, is engaged in the car and equipment rental businesses worldwide. It operates through four segments: U.S. Car Rental, International Car Rental, Worldwide Equipment Rental, and All Other Operations. HTZ has a PE ratio of 27. Currently there are 2 analysts that rate Hertz Global Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Hertz Global Holdings has been 6.1 million shares per day over the past 30 days. Hertz Global has a market cap of $9.3 billion and is part of the services sector and diversified services industry. Shares are down 17% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hertz Global Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins 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:
  • HTZ's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 98.4% when compared to the same quarter one year prior, rising from -$36.80 million to -$0.60 million.
  • Net operating cash flow has increased to $738.00 million or 25.50% when compared to the same quarter last year. In addition, HERTZ GLOBAL HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of 23.58%.
  • HERTZ GLOBAL HOLDINGS INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HERTZ GLOBAL HOLDINGS INC increased its bottom line by earning $0.76 versus $0.54 in the prior year. For the next year, the market is expecting a contraction of 19.7% in earnings ($0.61 versus $0.76).
  • 48.04% is the gross profit margin for HERTZ GLOBAL HOLDINGS INC which we consider to be strong. Regardless of HTZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HTZ's net profit margin of -0.02% significantly underperformed when compared to the industry average.

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