Trade-Ideas LLC identified

EarthLink Holdings

(

ELNK

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

  • ELNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.4 million.
  • ELNK has traded 123,730 shares today.
  • ELNK is trading at 2.37 times the normal volume for the stock at this time of day.
  • ELNK is trading at a new low 3.04% 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 ELNK:

EarthLink Holdings Corp., together with its subsidiaries, provides managed network, security, and cloud services to business and residential customers in the United States. It operates through four segments: Enterprise/Mid-Market, Small Business, Carrier/Transport, and Consumer Services. The stock currently has a dividend yield of 3%. Currently there are 4 analysts that rate EarthLink Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for EarthLink Holdings has been 727,200 shares per day over the past 30 days. EarthLink has a market cap of $691.6 million and is part of the technology sector and telecommunications industry. The stock has a beta of 1.02 and a short float of 4.2% with 4.15 days to cover. Shares are down 11.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates EarthLink Holdings as a

hold

. 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 disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • EARTHLINK HOLDINGS CORP 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, EARTHLINK HOLDINGS CORP continued to lose money by earning -$0.42 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus -$0.42).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 175.0% when compared to the same quarter one year prior, rising from -$10.48 million to $7.87 million.
  • The gross profit margin for EARTHLINK HOLDINGS CORP is rather high; currently it is at 54.29%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ELNK's net profit margin of 3.12% significantly trails the industry average.
  • Net operating cash flow has decreased to $10.63 million or 43.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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, EARTHLINK HOLDINGS CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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