Gogo (GOGO): Today's Weak On High Volume Stock
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.
Trade-Ideas LLC identified
(
) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Gogo as such a stock due to the following factors:
- GOGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.2 million.
- GOGO has traded 365,435 shares today.
- GOGO is trading at 4.07 times the normal volume for the stock at this time of day.
- GOGO is trading at a new low 5.00% 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.
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More details on GOGO:
Gogo Inc., through its subsidiaries, provides aero communications services to the commercial and business aviation markets in the United States and internationally. The company operates three segments: Commercial Aviation North America, Commercial Aviation Rest of World, and Business Aviation. Currently there are 4 analysts that rate Gogo a buy, 1 analyst rates it a sell, and 2 rate it a hold.
The average volume for Gogo has been 1.3 million shares per day over the past 30 days. Gogo has a market cap of $1.8 billion and is part of the technology sector and telecommunications industry. Shares are up 25.3% year-to-date as of the close of trading on Monday.
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Analysis:
rates Gogo as a
. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.
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 decreased by 9.1% when compared to the same quarter one year ago, dropping from -$22.11 million to -$24.11 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 Internet Software & Services industry and the overall market, GOGO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $10.11 million or 33.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 1.60 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, GOGO has managed to keep a strong quick ratio of 1.75, which demonstrates the ability to cover short-term cash needs.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GOGO has underperformed the S&P 500 Index, declining 7.10% from its price level of one year ago. 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.
- You can view the full Gogo Ratings Report.
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