Trade-Ideas LLC identified

Mattress Firm

(

MFRM

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

  • MFRM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.1 million.
  • MFRM has traded 61,601 shares today.
  • MFRM is trading at 3.13 times the normal volume for the stock at this time of day.
  • MFRM is trading at a new high 8.02% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 MFRM:

Mattress Firm Holding Corp., through its subsidiaries, operates as a specialty retailer of mattresses, and related products and accessories in the United States. It operates in two segments, Retail Operations and Franchise Operations. The company also operates an e-commerce Website. MFRM has a PE ratio of 45. Currently there are 2 analysts that rate Mattress Firm a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Mattress Firm has been 491,700 shares per day over the past 30 days. Mattress Firm 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 1.26 and a short float of 34.7% with 9.59 days to cover. Shares are down 11.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Mattress Firm 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 generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • MATTRESS FIRM HOLDING 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, MATTRESS FIRM HOLDING CORP increased its bottom line by earning $1.80 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $1.80).
  • 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 100.8% when compared to the same quarter one year prior, rising from $6.62 million to $13.29 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, MATTRESS FIRM HOLDING CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • MFRM'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 43.21%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio of 1.35 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.24, which clearly demonstrates the inability to cover short-term cash needs.

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