Valspar (VAL) Marked As A Barbarian At The Gate

Trade-Ideas LLC identified Valspar ( VAL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Valspar as such a stock due to the following factors:

  • VAL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.5 million.
  • VAL has traded 578,768 shares today.
  • VAL traded in a range 316.3% of the normal price range with a price range of $0.82.
  • VAL traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on VAL:

The Valspar Corporation develops, manufactures, and distributes a range of coatings, paints, and related products worldwide. It operates in two segments, Coatings and Paints. The stock currently has a dividend yield of 1.2%. VAL has a PE ratio of 22. Currently there are 2 analysts that rate Valspar a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Valspar has been 1.1 million shares per day over the past 30 days. Valspar has a market cap of $8.5 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.87 and a short float of 1.6% with 1.23 days to cover. Shares are up 28.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Valspar as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. 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:
  • 40.79% is the gross profit margin for VALSPAR CORP which we consider to be strong. 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 7.57% trails the industry average.
  • VALSPAR CORP's earnings per share declined by 9.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALSPAR CORP increased its bottom line by earning $4.84 versus $4.02 in the prior year. This year, the market expects an improvement in earnings ($4.85 versus $4.84).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.3%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income has decreased by 11.4% when compared to the same quarter one year ago, dropping from $90.31 million to $80.03 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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