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

Ferro

(

FOE

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

  • FOE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.6 million.
  • FOE has traded 621,720 shares today.
  • FOE is trading at 37.53 times the normal volume for the stock at this time of day.
  • FOE is trading at a new low 17.00% 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 FOE:

Ferro Corporation, together with its subsidiaries, produces specialty materials in the United States and internationally. It operates through four business units: Tile Coating Systems; Porcelain Enamel; Performance Colors and Glass; and Pigments, Powders and Oxides. FOE has a PE ratio of 17. Currently there are 4 analysts that rate Ferro a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ferro has been 676,000 shares per day over the past 30 days. Ferro has a market cap of $1.3 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.94 and a short float of 2.1% with 2.10 days to cover. Shares are up 18.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ferro as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Net operating cash flow has significantly increased by 53.82% to -$10.27 million when compared to the same quarter last year. In addition, FERRO CORP has also vastly surpassed the industry average cash flow growth rate of -94.32%.
  • FERRO CORP has improved earnings per share by 41.7% 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, FERRO CORP swung to a loss, reporting -$0.11 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus -$0.11).
  • The gross profit margin for FERRO CORP is currently lower than what is desirable, coming in at 29.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.17% trails that of the industry average.
  • 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 Chemicals industry. The net income has significantly decreased by 36.2% when compared to the same quarter one year ago, falling from $17.21 million to $10.97 million.

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