Weak On High Volume: Splunk (SPLK)
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 weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Splunk as such a stock due to the following factors:
- SPLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $255.8 million.
- SPLK has traded 328,303 shares today.
- SPLK is trading at 2.42 times the normal volume for the stock at this time of day.
- SPLK is trading at a new low 4.00% 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.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in SPLK with the Ticky from Trade-Ideas. See the FREE profile for SPLK NOW at Trade-Ideas
More details on SPLK:
Splunk, Inc. provides software solutions that provide real-time operational intelligence in the United States and internationally. SPLK has a PE ratio of 745.8. Currently there are 15 analysts that rate Splunk a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Splunk has been 2.1 million shares per day over the past 30 days. Splunk has a market cap of $8.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.11 and a short float of 7.1% with 2.02 days to cover. Shares are up 11.4% year-to-date as of the close of trading on Tuesday.
Analysis:
rates Splunk as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself 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 Software industry. The net income has significantly decreased by 193.3% when compared to the same quarter one year ago, falling from -$16.55 million to -$48.55 million.
- 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. Compared to other companies in the Software industry and the overall market, SPLUNK INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- SPLUNK 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SPLUNK INC reported poor results of -$0.75 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.75).
- The gross profit margin for SPLUNK INC is currently very high, coming in at 87.80%. Regardless of SPLK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SPLK's net profit margin of -41.84% significantly underperformed when compared to the industry average.
- You can view the full Splunk Ratings Report.
null