Trade-Ideas LLC identified

21Vianet Group

(

VNET

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified 21Vianet Group as such a stock due to the following factors:

  • VNET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.1 million.
  • VNET has traded 1.0 million shares today.
  • VNET is trading at 24.18 times the normal volume for the stock at this time of day.
  • VNET is trading at a new low 3.03% 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 VNET:

21Vianet Group, Inc. provides carrier-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small- to mid-sized enterprises in the People's Republic of China. VNET has a PE ratio of 168. Currently there are 2 analysts that rate 21Vianet Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for 21Vianet Group has been 636,900 shares per day over the past 30 days. 21Vianet Group has a market cap of $1.7 billion and is part of the technology sector and computer software & services industry. Shares are up 30.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates 21Vianet Group as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk 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 Software & Services industry. The net income has significantly decreased by 132.2% when compared to the same quarter one year ago, falling from -$10.08 million to -$23.41 million.
  • The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, VNET's quick ratio is somewhat strong at 1.07, demonstrating the ability to handle short-term liquidity needs.
  • 21VIANET GROUP 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, 21VIANET GROUP INC reported poor results of -$0.85 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus -$0.85).
  • After a year of stock price fluctuations, the net result is that VNET'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. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, 21VIANET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.

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