Trade-Ideas LLC identified

Autohome

(

ATHM

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

  • ATHM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.1 million.
  • ATHM has traded 73,801 shares today.
  • ATHM is trading at 2.20 times the normal volume for the stock at this time of day.
  • ATHM is trading at a new low 5.13% 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 ATHM:

TST Recommends

Autohome Inc. operates as an online destination for automobile consumers in the People's Republic of China. ATHM has a PE ratio of 16. Currently there are 5 analysts that rate Autohome a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Autohome has been 924,500 shares per day over the past 30 days. Autohome has a market cap of $3.0 billion and is part of the technology sector and internet industry. Shares are down 26.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Autohome as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • ATHM's very impressive revenue growth greatly exceeded the industry average of 14.9%. Since the same quarter one year prior, revenues leaped by 59.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ATHM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.70, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for AUTOHOME INC -ADR is currently very high, coming in at 83.93%. Regardless of ATHM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATHM's net profit margin of 25.72% compares favorably to the industry average.
  • 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 Internet Software & Services industry and the overall market, AUTOHOME INC -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • ATHM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.51%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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