AAR (AIR) Highlighted As Weak On High Volume
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.
Trade-Ideas LLC identified
(
) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified AAR as such a stock due to the following factors:
- AIR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.8 million.
- AIR has traded 107,699 shares today.
- AIR is trading at 18.99 times the normal volume for the stock at this time of day.
- AIR is trading at a new low 3.25% below yesterday's close.
'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
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More details on AIR:
AAR CORP. provides products and services to commercial aviation, government, and defense markets worldwide. The company operates through two segments, Aviation Services and Technology Products. The stock currently has a dividend yield of 0.9%. AIR has a PE ratio of 20.3. Currently there are 2 analysts that rate AAR a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for AAR has been 202,500 shares per day over the past 30 days. AAR has a market cap of $1.3 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.45 and a short float of 4.1% with 5.02 days to cover. Shares are up 18.6% year-to-date as of the close of trading on Friday.
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Analysis:
rates AAR as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
- Compared to its closing price of one year ago, AIR's share price has jumped by 26.34%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- AIR, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 9.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Aerospace & Defense industry and the overall market, AAR CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- AAR CORP's earnings per share declined by 24.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AAR CORP increased its bottom line by earning $1.83 versus $1.36 in the prior year. For the next year, the market is expecting a contraction of 7.7% in earnings ($1.69 versus $1.83).
- You can view the full AAR Ratings Report.
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