Trade-Ideas LLC identified

Schnitzer Steel Industries

(

SCHN

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

  • SCHN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.3 million.
  • SCHN has traded 178,202 shares today.
  • SCHN is trading at 2.10 times the normal volume for the stock at this time of day.
  • SCHN is trading at a new low 5.01% 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 SCHN:

Schnitzer Steel Industries, Inc. recycles ferrous and nonferrous scrap metals; and manufactures finished steel products worldwide. It operates through two segments, Auto and Metals Recycling (AMR) and Steel Manufacturing Business (SMB). The stock currently has a dividend yield of 5.1%. Currently there are no analysts that rate Schnitzer Steel Industries a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Schnitzer Steel Industries has been 354,600 shares per day over the past 30 days. Schnitzer has a market cap of $386.8 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.32 and a short float of 9.3% with 7.98 days to cover. Shares are down 33.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Schnitzer Steel Industries as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 48.0% when compared to the same quarter one year prior, rising from $7.25 million to $10.73 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
  • SCHNITZER STEEL INDS has improved earnings per share by 44.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SCHNITZER STEEL INDS swung to a loss, reporting -$7.04 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus -$7.04).
  • Net operating cash flow has declined marginally to $65.21 million or 5.00% when compared to the same quarter last year. Despite a decrease in cash flow SCHNITZER STEEL INDS is still fairing well by exceeding its industry average cash flow growth rate of -28.90%.
  • 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 Metals & Mining industry and the overall market, SCHNITZER STEEL INDS's return on equity significantly trails that of both the industry average and the S&P 500.

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