Trade-Ideas LLC identified Harris Corporation ( HRS) 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 Harris Corporation as such a stock due to the following factors:

  • HRS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $104.1 million.
  • HRS has traded 1.6 million shares today.
  • HRS is trading at 6.66 times the normal volume for the stock at this time of day.
  • HRS 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 HRS:

Harris Corporation provides technology-based solutions that solve government and commercial customers' mission-critical challenges. The company operates in four segments: Communication Systems, Critical Networks, Electronic Systems, and Space and Intelligence Systems. The stock currently has a dividend yield of 2.3%. HRS has a PE ratio of 28. Currently there are 7 analysts that rate Harris Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Harris Corporation has been 1.1 million shares per day over the past 30 days. Harris has a market cap of $10.8 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.24 and a short float of 3.3% with 3.08 days to cover. Shares are down 0.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Harris Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • HRS's very impressive revenue growth greatly exceeded the industry average of 4.8%. Since the same quarter one year prior, revenues leaped by 56.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 Communications Equipment industry. The net income increased by 18.3% when compared to the same quarter one year prior, going from $125.10 million to $148.00 million.
  • 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.
  • HARRIS CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HARRIS CORP reported lower earnings of $3.19 versus $5.00 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $3.19).
  • 35.39% is the gross profit margin for HARRIS CORP which we consider to be strong. Regardless of HRS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HRS's net profit margin of 8.17% is significantly lower than the industry average.

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