Trade-Ideas LLC identified

LendingClub

(

LC

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

  • LC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $85.8 million.
  • LC has traded 650,916 shares today.
  • LC is trading at 2.72 times the normal volume for the stock at this time of day.
  • LC is trading at a new low 5.08% 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 LC:

LendingClub Corporation operates as an online marketplace for connecting borrowers and investors in the United States. Currently there are 8 analysts that rate LendingClub a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for LendingClub has been 7.4 million shares per day over the past 30 days. LendingClub has a market cap of $3.4 billion and is part of the financial sector and financial services industry. Shares are down 23.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LendingClub as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for LENDINGCLUB CORP is currently extremely low, coming in at 8.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.39% trails that of the industry average.
  • LC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 61.65%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • LC, with its decline in revenue, underperformed when compared the industry average of 8.7%. Since the same quarter one year prior, revenues fell by 21.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • LENDINGCLUB 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LENDINGCLUB CORP continued to lose money by earning -$0.02 versus -$0.08 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus -$0.02).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Consumer Finance industry. The net income increased by 150.6% when compared to the same quarter one year prior, rising from -$9.04 million to $4.57 million.

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