Meritor (MTOR) Is Weak On High Volume Today

Trade-Ideas LLC identified Meritor (MTOR) as a weak on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Meritor

(

MTOR

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

  • MTOR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.9 million.
  • MTOR has traded 313,027 shares today.
  • MTOR is trading at 7.75 times the normal volume for the stock at this time of day.
  • MTOR is trading at a new low 9.01% 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 MTOR:

Meritor, Inc. designs, develops, manufactures, sells, markets, distributes, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. MTOR has a PE ratio of 9. Currently there are 2 analysts that rate Meritor a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Meritor has been 1.2 million shares per day over the past 30 days. Meritor has a market cap of $1.0 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 2.04 and a short float of 7.8% with 5.95 days to cover. Shares are down 29% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Meritor as a

hold

. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • Net operating cash flow has slightly increased to $93.00 million or 9.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.19%.
  • Despite the weak revenue results, MTOR has outperformed against the industry average of 19.8%. Since the same quarter one year prior, revenues slightly dropped by 7.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MERITOR INC 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MERITOR INC turned its bottom line around by earning $2.76 versus -$0.21 in the prior year. For the next year, the market is expecting a contraction of 47.3% in earnings ($1.46 versus $2.76).
  • The share price of MERITOR INC has not done very well: it is down 10.45% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 Machinery industry. The net income has significantly decreased by 94.4% when compared to the same quarter one year ago, falling from $234.00 million to $13.00 million.

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