Trade-Ideas LLC identified

Scientific Games

(

SGMS

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

  • SGMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.0 million.
  • SGMS has traded 87,175 shares today.
  • SGMS is trading at 2.01 times the normal volume for the stock at this time of day.
  • SGMS is trading at a new low 3.07% 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 SGMS:

Scientific Games Corporation develops technology-based products and services, and associated content for the gaming and lottery industries worldwide. The company operates through three segments: Gaming, Lottery, and Interactive. Currently there are 5 analysts that rate Scientific Games a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Scientific Games has been 1.1 million shares per day over the past 30 days. Scientific Games has a market cap of $693.3 million and is part of the services sector and leisure industry. The stock has a beta of 2.40 and a short float of 35.5% with 8.82 days to cover. Shares are down 36.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Scientific Games as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • SCIENTIFIC GAMES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SCIENTIFIC GAMES CORP reported poor results of -$2.76 versus -$0.31 in the prior year. For the next year, the market is expecting a contraction of 293.5% in earnings (-$10.86 versus -$2.76).
  • 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 871.6% when compared to the same quarter one year ago, falling from -$69.80 million to -$678.20 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 860.97% 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.
  • The gross profit margin for SCIENTIFIC GAMES CORP is rather high; currently it is at 62.78%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -100.98% is in-line with the industry average.
  • Net operating cash flow has increased to $141.10 million or 11.71% when compared to the same quarter last year. In addition, SCIENTIFIC GAMES CORP has also modestly surpassed the industry average cash flow growth rate of 2.77%.

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