Trade-Ideas LLC identified First Republic Bank ( FRC) 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 First Republic Bank as such a stock due to the following factors:

  • FRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.9 million.
  • FRC has traded 799,290 shares today.
  • FRC is trading at 2.06 times the normal volume for the stock at this time of day.
  • FRC 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 FRC:

First Republic Bank, together with its subsidiaries, provides private banking, private business banking, real estate lending, and wealth management services to clients in metropolitan areas of the United States. It operates through two segments, Commercial Banking and Wealth Management. The stock currently has a dividend yield of 0.9%. FRC has a PE ratio of 22. Currently there are 7 analysts that rate First Republic Bank a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for First Republic Bank has been 963,800 shares per day over the past 30 days. First Republic has a market cap of $9.6 billion and is part of the financial sector and banking industry. Shares are up 1.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates First Republic Bank as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 16.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FIRST REPUBLIC BANK has improved earnings per share by 16.7% 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, FIRST REPUBLIC BANK increased its bottom line by earning $3.17 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($3.66 versus $3.17).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 21.3% when compared to the same quarter one year prior, going from $115.46 million to $140.05 million.
  • The gross profit margin for FIRST REPUBLIC BANK is currently very high, coming in at 90.86%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 26.35% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.54% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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