Barbarian At The Gate: Everest Re Group (RE)

Trade-Ideas LLC identified Everest Re Group ( RE) 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 Everest Re Group as such a stock due to the following factors:

  • RE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.0 million.
  • RE has traded 388,526 shares today.
  • RE traded in a range 234.1% of the normal price range with a price range of $6.97.
  • RE traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 RE:

Everest Re Group, Ltd., through its subsidiaries, provides reinsurance and insurance products. The company operates in five segments: U.S. Reinsurance, International, Bermuda, Insurance, and Mt. Logan Re. The U.S. The stock currently has a dividend yield of 2.6%. RE has a PE ratio of 9. Currently there are 2 analysts that rate Everest Re Group a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Everest Re Group has been 347,800 shares per day over the past 30 days. Everest Re Group has a market cap of $7.4 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.66 and a short float of 5.4% with 5.68 days to cover. Shares are down 5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Everest Re Group as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • RE's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.6%. Since the same quarter one year prior, revenues fell by 12.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • After a year of stock price fluctuations, the net result is that RE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, EVEREST RE GROUP LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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