Trade-Ideas LLC identified

Group 1 Automotive

(

GPI

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Group 1 Automotive as such a stock due to the following factors:

  • GPI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.3 million.
  • GPI has traded 65,154 shares today.
  • GPI is trading at 2.32 times the normal volume for the stock at this time of day.
  • GPI is trading at a new low 5.04% 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 GPI:

TST Recommends

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry. It sells new and used cars, light trucks, and vehicle parts; arranges vehicle financing; sells service and insurance contracts; and provides automotive maintenance and repair services. The stock currently has a dividend yield of 1.6%. GPI has a PE ratio of 9. Currently there are 3 analysts that rate Group 1 Automotive a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Group 1 Automotive has been 281,900 shares per day over the past 30 days. Group 1 Automotive has a market cap of $1.4 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.16 and a short float of 5.9% with 4.64 days to cover. Shares are down 24% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Group 1 Automotive as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • GPI's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 6.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 73.0% when compared to the same quarter one year prior, rising from $26.16 million to $45.26 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, GROUP 1 AUTOMOTIVE INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The debt-to-equity ratio is very high at 2.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.19, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for GROUP 1 AUTOMOTIVE INC is currently extremely low, coming in at 14.23%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.61% trails that of the industry average.

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