Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Aug 13, 2019
Poor fundamentals and the $26 level keeping Adient in check

Poor fundamentals and the $26 level keeping Adient in check

Irish automotive supply manufacturer Adient (NYSE: ADNT) has been struggling over the past 10 months. The company manufactures seats, seat systems, and interiors for use in passenger cars, commercial vehicles, and light trucks. Its stock gapped lower last November and hasn’t been able to fully recover since then.

If we look at the daily chart for Adient we see that the stock dropped below the $26 level when it gapped down after a disappointing earnings report. After that drop, the stock has made several attempts to move back above the $26 mark but has been turned away each time. The stock gapped higher and moved up nicely on August 6 after the company reported better than expected earnings. Even with that good news, the stock was not able to break through the resistance and looks to be headed lower once again.

We see that the daily stochastic readings reached overbought territory a few days after the earnings surprise, but now the indicators have turned lower and made a bearish crossover on August.

In addition to facing technical resistance, the company’s fundamental indicators are well below average. Looking at the Tickeron Fundamental Analysis Overview we see that the “Tickeron Valuation Rating of 78 indicates that the company is slightly overvalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.” One item in the valuation formula that really stands out is the P/E ratio at 182.

Also from the Tickeron overview we see that the Tickeron SMR rating for this company is 100, indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.

Looking at some of the stats that comprise those ratings, we see that the company saw sales decline by 6% in the most recent quarter and has only been able to grow sales by 1% per year over the last three years. The profit margin is a paltry 3.6%.

Earnings have been declining at a rate of 27% per year over the last three years and they dropped by 74% in the most recent quarterly report. Analysts expect earnings to decline by 76% for this year as a whole.

The sentiment toward Adient is extremely bearish, but given the technical picture and fundamental outlook the bearish posture appears to be deserved. There are 14 analysts covering the stock and only four have the stock rated as a “buy”. There are seven “hold” ratings and three “sell” ratings.

The short interest ratio for the stock is at 5.4 and that is above average and indicates more bearish sentiment toward the stock than the average company. There are 10.6 million shares sold short currently and that figure is down from 11.2 million at the mid-July short interest report.

The idea of contrarian investing is to find stocks with good fundamentals and in an upward trend, but where the sentiment is extremely bearish—at least for bullish trades. For bearish trades you ideally want to find stocks with poor fundamentals, in a downward trend, and have excessive optimism toward them. In the case of Adient, the fundamentals are poor, and the stock is having trouble moving past the resistance at $26. The excessive pessimism from analysts and short sellers seems to be deserved and doesn’t really present a contrarian case.

Related Tickers: ADNT
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.