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

Sonus Networks

(

SONS

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

  • SONS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.6 million.
  • SONS has traded 216,739 shares today.
  • SONS is trading at 10.23 times the normal volume for the stock at this time of day.
  • SONS is trading at a new low 5.02% 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 SONS:

Sonus Networks, Inc. provides networked solutions for communications service providers and enterprises. Currently there are 8 analysts that rate Sonus Networks a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Sonus Networks has been 472,500 shares per day over the past 30 days. Sonus has a market cap of $759.3 million and is part of the technology sector and telecommunications industry. The stock has a beta of 1.64 and a short float of 4.4% with 3.05 days to cover. Shares are down 27.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sonus Networks as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:

  • SONS's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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.
  • SONS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SONS has a quick ratio of 2.18, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SONUS NETWORKS INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, SONUS NETWORKS INC continued to lose money by earning -$0.30 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.56 versus -$0.30).
  • Net operating cash flow has decreased to $1.96 million or 45.14% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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 Communications Equipment industry. The net income has significantly decreased by 905.9% when compared to the same quarter one year ago, falling from $0.27 million to -$2.19 million.

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