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

Healthways

(

HWAY

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

  • HWAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.1 million.
  • HWAY has traded 96,872 shares today.
  • HWAY is trading at 3.15 times the normal volume for the stock at this time of day.
  • HWAY is trading at a new low 3.01% 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 HWAY:

Healthways, Inc., together with its subsidiaries, provides population health management solutions to help people to enhance well-being and health. The company provides personalized solutions for individuals, irrespective of their health status, age, or paying sponsor. Currently there are 5 analysts that rate Healthways a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Healthways has been 462,600 shares per day over the past 30 days. Healthways has a market cap of $695.8 million and is part of the health care sector and health services industry. The stock has a beta of -0.17 and a short float of 14.3% with 10.09 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 Healthways 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 revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • HEALTHWAYS INC 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HEALTHWAYS INC continued to lose money by earning -$0.16 versus -$0.25 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.16).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Providers & Services industry average. The net income increased by 69.6% when compared to the same quarter one year prior, rising from -$9.60 million to -$2.91 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • The gross profit margin for HEALTHWAYS INC is currently extremely low, coming in at 14.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.53% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $1.83 million or 79.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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