Trade-Ideas LLC identified

Melco Crown Entertainment

(

MPEL

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

  • MPEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.0 million.
  • MPEL has traded 340,645 shares today.
  • MPEL is trading at 2.00 times the normal volume for the stock at this time of day.
  • MPEL is trading at a new low 3.08% 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 MPEL:

Melco Crown Entertainment Limited, through its subsidiaries, develops, owns, and operates casino gaming and entertainment casino resort facilities in Asia. The stock currently has a dividend yield of 0.2%. MPEL has a PE ratio of 35. Currently there are 2 analysts that rate Melco Crown Entertainment a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Melco Crown Entertainment has been 3.1 million shares per day over the past 30 days. Melco Crown Entertainment has a market cap of $6.8 billion and is part of the services sector and leisure industry. Shares are down 24.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Melco Crown Entertainment as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.1%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Even though the current debt-to-equity ratio is 1.06, it is still below the industry average, suggesting that this level of debt is acceptable within the Hotels, Restaurants & Leisure industry. Despite the fact that MPEL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.20 is high and demonstrates strong liquidity.
  • MELCO CROWN ENTMT LTD's earnings per share declined by 36.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MELCO CROWN ENTMT LTD reported lower earnings of $0.20 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($0.35 versus $0.20).
  • 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 34.4% when compared to the same quarter one year ago, falling from $60.63 million to $39.80 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, MELCO CROWN ENTMT LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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