Strong On High Relative Volume: Wayfair (W)

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

Trade-Ideas LLC identified

Wayfair

(

W

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

  • W has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.4 million.
  • W has traded 157,147 shares today.
  • W is trading at 2.09 times the normal volume for the stock at this time of day.
  • W is trading at a new high 3.02% 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 W:

Wayfair Inc. engages in the e-commerce business in the United States. It offers approximately seven million products for the home under various brands. Currently there are 7 analysts that rate Wayfair a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Wayfair has been 1.1 million shares per day over the past 30 days. Wayfair has a market cap of $3.3 billion and is part of the services sector and retail industry. Shares are down 18.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Wayfair as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • 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 & Catalog Retail industry. The net income has significantly decreased by 51.8% when compared to the same quarter one year ago, falling from -$27.14 million to -$41.21 million.
  • The gross profit margin for WAYFAIR INC is currently lower than what is desirable, coming in at 25.36%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.51% trails that of the industry average.
  • Net operating cash flow has decreased to -$51.20 million or 45.45% when compared to the same quarter last year. Despite a decrease in cash flow WAYFAIR INC is still fairing well by exceeding its industry average cash flow growth rate of -67.80%.
  • WAYFAIR INC's earnings per share declined by 48.5% 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, WAYFAIR INC continued to lose money by earning -$0.92 versus -$1.17 in the prior year. For the next year, the market is expecting a contraction of 20.6% in earnings (-$1.11 versus -$0.92).
  • After a year of stock price fluctuations, the net result is that W's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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