Is DLG Stock Ready To Move For Upside Trend?
- DLG STOCK SURGED 10 % IN A WEEK FROM THE SUPPORT.
- NET INCOME OF THE COMPANY IS EXPECTED TO FALL BY 565% IN THIS YEAR.
- THE REVENUE OF THE COMPANY IS EXPECTED TO RISE SLIGHTLY.
MARKET CAPITAL OF DIRECT LINE INSURANCE GROUP – GBP 2.31 B
CURRENT MARKET PRICE OF DLG – GBP 176
FINANCIAL ANALYSIS OF DLG COMPANY
In the last session, i.e 11 September Direct Line insurance group stock was down by – 5.50 ( 3.30 % ) and closed the day with some profit booking at GBP 176 after surging 20% in two days.
Directline Insurance Group stock surged 15% in a month which shows that the stock is currently in a short-term bullish trend, although the stock is still down by about 40% off highs which indicates that the overall trend is still downward.
The revenue of the stock has been down for 5 consecutive years which is not at all a good sign for any company and the company should take some necessary steps to increase the revenue as net income has also fallen by 117.15 % the previous year and it is expected that the net income can fall further to some extreme levels.
EPS of the company has also been declining for 5 years and it is expected that this year’s outcome will not be different and it can be even worse than the previous year, although the revenue is expected to rise slightly the net debt of the company raised to double in the previous financial result which is also not a good sign.
TECHNICAL ANALYSIS OF DLG COMPANY
The stock is currently trading above the important EMAs i.e. 50, 100, and 200 EMA which indicates that the price is trying to change its bearish structure and is about to start its bullish momentum. There is a huge gap between GBP 190 -230 which can provide a good rally in a short time as there is no untouched resistance between those levels and the market will take it as an opportunity to go aggressively. The stock formed a double bottom near the level of GBP 132 and is now trading very close to the resistance levels of GBP 178 – GBP 185 but looking very strong as the candles are very bullish at this level. But once the stock is able to break this resistance level it can go further near to the next resistance level placed near GBP 230 -238, but to go to that level company needs to give some surprising outcomes in upcoming results, which seems to be a little difficult as of now.
If we observe in the chart the price doesn’t react to the demand and supply much and it is habitual of fake breakouts and breakdowns.
On 1 one-hour chart, the price gave a breakout from a symmetrical triangle kind of pattern and is showing a good bullish momentum on the upside, although as we discussed above the price is habitual of fake breakouts and breakdowns we can observe this in the current scenario as the price broke the rising trendline and then it showed a sharp up move after that after trapping the sellers.
CONCLUSION
As the price is currently trying to break the resistance level we should wait to break and sustain those levels as the financials are not supporting the price and this year the market is expecting a poor result so the possibility of sustaining the higher levels is low until and unless there is some sign of improvement in financials.
TECHNICAL LEVELS
- RESISTANCE LEVEL- GBP 190 AND GBP 230
- SUPPORT LEVELS- GBP 164 AND GBP 133
