Trade-Ideas LLC identified

Companhia Brasileira De Distribuicao

(

CBD

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

  • CBD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.4 million.
  • CBD has traded 106,979 shares today.
  • CBD is trading at 3.25 times the normal volume for the stock at this time of day.
  • CBD is trading at a new low 7.05% 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 CBD:

Companhia Brasileira de Distribuicao engages in the retail of food, clothing, home appliances, electronics, and other products through its chain of hypermarkets, supermarkets, specialized stores, and department stores primarily in Brazil. The stock currently has a dividend yield of 1.7%. CBD has a PE ratio of 5. Currently there are no analysts that rate Companhia Brasileira De Distribuicao a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Companhia Brasileira De Distribuicao has been 943,500 shares per day over the past 30 days. Companhia Brasileira De Distribuicao has a market cap of $280.6 million and is part of the services sector and retail industry. Shares are down 17.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Companhia Brasileira De Distribuicao as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

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 Food & Staples Retailing industry. The net income has significantly decreased by 121.3% when compared to the same quarter one year ago, falling from $89.68 million to -$19.07 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. In comparison to the other companies in the Food & Staples Retailing industry and the overall market, CIA BRASILEIRA DE DISTRIB's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for CIA BRASILEIRA DE DISTRIB is rather low; currently it is at 23.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.07% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$35.69 million or 110.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 75.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 122.85% 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.

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