Demandware (DWRE) Flagged As Strong On High Volume

Trade-Ideas LLC identified Demandware (DWRE) as a strong on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Demandware

(

DWRE

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Demandware as such a stock due to the following factors:

  • DWRE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.8 million.
  • DWRE has traded 66,587 shares today.
  • DWRE is trading at 3.14 times the normal volume for the stock at this time of day.
  • DWRE is trading at a new high 5.18% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 DWRE:

Demandware, Inc. provides enterprise-class cloud based digital commerce solutions in the United States, Germany, the United Kingdom, and internationally. Currently there are 9 analysts that rate Demandware a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Demandware has been 518,600 shares per day over the past 30 days. Demandware has a market cap of $1.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.88 and a short float of 16.2% with 9.94 days to cover. Shares are down 19.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Demandware as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 48.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • DWRE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.93, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for DEMANDWARE INC is currently very high, coming in at 76.11%. Regardless of DWRE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DWRE's net profit margin of -20.69% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 87.7% when compared to the same quarter one year ago, falling from -$6.35 million to -$11.92 million.
  • 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 Internet Software & Services industry and the overall market, DEMANDWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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