Strong On High Volume: Alcatel-Lucent (ALU)
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Alcatel-Lucent as such a stock due to the following factors:
- ALU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.7 million.
- ALU has traded 1.3 million shares today.
- ALU is trading at 3.27 times the normal volume for the stock at this time of day.
- ALU is trading at a new high 3.00% 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.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in ALU with the Ticky from Trade-Ideas. See the FREE profile for ALU NOW at Trade-Ideas
More details on ALU:
Alcatel-Lucent provides Internet protocol (IP) and cloud networking, and ultra-broadband fixed and wireless access to service providers and their customers, enterprises, and institutions worldwide. The company operates in three segments: Core Networking, Access, and Other. Currently there are 4 analysts that rate Alcatel-Lucent a buy, 1 analyst rates it a sell, and 4 rate it a hold.
The average volume for Alcatel-Lucent has been 7.2 million shares per day over the past 30 days. Alcatel-Lucent has a market cap of $10.4 billion and is part of the technology sector and telecommunications industry. Shares are up 7.9% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Alcatel-Lucent as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.
Highlights from the ratings report include:
- ALCATEL-LUCENT reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALCATEL-LUCENT continued to lose money by earning -$0.02 versus -$0.74 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$0.02).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 133.0% when compared to the same quarter one year prior, rising from $149.55 million to $348.44 million.
- 38.74% is the gross profit margin for ALCATEL-LUCENT which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ALU's net profit margin of 8.80% significantly trails the industry average.
- Net operating cash flow has decreased to $543.36 million or 18.95% when compared to the same quarter last year. Despite a decrease in cash flow of 18.95%, ALCATEL-LUCENT is in line with the industry average cash flow growth rate of -19.54%.
- The debt-to-equity ratio is very high at 2.84 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ALU's quick ratio is somewhat strong at 1.06, demonstrating the ability to handle short-term liquidity needs.
- You can view the full Alcatel-Lucent Ratings Report.
null