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
) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ocwen Financial as such a stock due to the following factors:
- OCN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.6 million.
- OCN has traded 1.7 million shares today.
- OCN is trading at 17.85 times the normal volume for the stock at this time of day.
- OCN is trading at a new low 21.00% 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 OCN:
Ocwen Financial Corporation, a financial services holding company, engages in servicing and origination of mortgage loans in the United States. Currently there are 2 analysts that rate Ocwen Financial a buy, 1 analyst rates it a sell, and 3 rate it a hold.
The average volume for Ocwen Financial has been 2.7 million shares per day over the past 30 days. Ocwen Financial has a market cap of $1.4 billion and is part of the financial sector and real estate industry. The stock has a beta of 2.61 and a short float of 29.2% with 16.77 days to cover. Shares are down 22.1% year-to-date as of the close of trading on Thursday.
rates Ocwen Financial as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- 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 Thrifts & Mortgage Finance industry. The net income has significantly decreased by 43.2% when compared to the same quarter one year ago, falling from $60.50 million to $34.36 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, OCWEN FINANCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 69.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 37.20% compared to the year-earlier 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.
- OCWEN FINANCIAL CORP's earnings per share declined by 37.2% 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, OCWEN FINANCIAL CORP swung to a loss, reporting -$3.83 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($0.66 versus -$3.83).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full Ocwen Financial Ratings Report.