EarthLink Holdings (ELNK) Weak On High Volume

Trade-Ideas LLC identified EarthLink Holdings (ELNK) as a weak on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

EarthLink Holdings

(

ELNK

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

  • ELNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.7 million.
  • ELNK has traded 145,800 shares today.
  • ELNK is trading at 2.25 times the normal volume for the stock at this time of day.
  • ELNK is trading at a new low 3.10% 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 ELNK:

EarthLink Holdings Corp., together with its subsidiaries, provides managed network, security, and cloud services to business and residential customers in the United States. The company operates in two segments, Business Services and Consumer Services. The stock currently has a dividend yield of 2.2%. Currently there are 3 analysts that rate EarthLink Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for EarthLink Holdings has been 949,300 shares per day over the past 30 days. EarthLink has a market cap of $962.7 million and is part of the technology sector and telecommunications industry. The stock has a beta of 0.59 and a short float of 4.3% with 4.35 days to cover. Shares are up 105.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates EarthLink Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, ELNK's share price has jumped by 112.12%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for EARTHLINK HOLDINGS CORP is rather high; currently it is at 54.82%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.88% is in-line with the industry average.
  • EARTHLINK HOLDINGS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EARTHLINK HOLDINGS CORP continued to lose money by earning -$0.71 versus -$5.25 in the prior year. This year, the market expects an improvement in earnings (-$0.42 versus -$0.71).
  • The debt-to-equity ratio is very high at 14.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ELNK maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
  • 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 439.1% when compared to the same quarter one year ago, falling from -$1.95 million to -$10.52 million.

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