Trade-Ideas LLC identified Becton Dickinson ( BDX) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Becton Dickinson as such a stock due to the following factors:

  • BDX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $165.1 million.
  • BDX has traded 775,200 shares today.
  • BDX is trading at 1.53 times the normal volume for the stock at this time of day.
  • BDX crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on BDX:

Becton, Dickinson and Company develops, manufactures, and sells medical devices, instrument systems, and reagents worldwide. The stock currently has a dividend yield of 1.8%. BDX has a PE ratio of 44. Currently there are 9 analysts that rate Becton Dickinson a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Becton Dickinson has been 966,200 shares per day over the past 30 days. Becton Dickinson has a market cap of $31.5 billion and is part of the health care sector and health services industry. The stock has a beta of 1.11 and a short float of 2.5% with 4.54 days to cover. Shares are down 4.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Becton Dickinson as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, expanding profit margins and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • BDX's revenue growth has slightly outpaced the industry average of 30.2%. Since the same quarter one year prior, revenues rose by 39.0%. 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 $678.00 million or 25.78% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.75%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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 gross profit margin for BECTON DICKINSON & CO is rather high; currently it is at 56.99%. Regardless of BDX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.91% trails the industry average.

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