Trade-Ideas LLC identified

Extreme Networks

(

EXTR

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

  • EXTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • EXTR has traded 174,993 shares today.
  • EXTR is trading at 4.22 times the normal volume for the stock at this time of day.
  • EXTR is trading at a new low 4.10% 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 EXTR:

Extreme Networks, Inc., together with its subsidiaries, provides wired and wireless network infrastructure equipment, software, and services for enterprises, data centers, and service providers. Currently there are 3 analysts that rate Extreme Networks a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Extreme Networks has been 1.1 million shares per day over the past 30 days. Extreme has a market cap of $290.9 million and is part of the technology sector and computer hardware industry. The stock has a beta of 1.12 and a short float of 3.9% with 2.21 days to cover. Shares are down 29.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Extreme Networks as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • 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. Compared to other companies in the Communications Equipment industry and the overall market, EXTREME NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $7.44 million or 81.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 47.40% is the gross profit margin for EXTREME NETWORKS INC which we consider to be strong. Regardless of EXTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EXTR's net profit margin of -5.19% significantly underperformed when compared to the industry average.
  • EXTR, with its decline in revenue, slightly underperformed the industry average of 4.8%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • EXTR's debt-to-equity ratio of 0.65 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.73 is weak.

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