Strong On High Relative Volume: ADT (ADT)

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

Trade-Ideas LLC identified

ADT

(

ADT

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

  • ADT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.6 million.
  • ADT has traded 669,627 shares today.
  • ADT is trading at 16.76 times the normal volume for the stock at this time of day.
  • ADT is trading at a new high 7.00% 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 ADT:

The ADT Corporation provides monitored security, interactive home and business automation, and related monitoring services in the United States and Canada. The stock currently has a dividend yield of 2.5%. ADT has a PE ratio of 2. Currently there are 4 analysts that rate ADT a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for ADT has been 1.6 million shares per day over the past 30 days. ADT has a market cap of $5.7 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.32 and a short float of 27.9% with 23.41 days to cover. Shares are down 10.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates ADT as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 5.8%. 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.
  • The gross profit margin for ADT CORP is currently very high, coming in at 87.75%. Regardless of ADT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADT's net profit margin of 8.35% compares favorably to the industry average.
  • Currently the debt-to-equity ratio of 1.71 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.25, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Commercial Services & Supplies industry and the overall market, ADT CORP's return on equity is below that of both the industry average and the S&P 500.

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