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 or Stephanie Link.

Trade-Ideas LLC identified

Walter Investment Management

(

WAC

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

  • WAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.1 million.
  • WAC has traded 52,644 shares today.
  • WAC is trading at 5.21 times the normal volume for the stock at this time of day.
  • WAC is trading at a new low 3.10% 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 WAC:

Walter Investment Management Corp., together with its subsidiaries, provides business services to the residential mortgage industry in the United States. Currently there are 2 analysts that rate Walter Investment Management a buy, 3 analysts rate it a sell, and 4 rate it a hold.

The average volume for Walter Investment Management has been 512,600 shares per day over the past 30 days. Walter Investment Management has a market cap of $683.3 million and is part of the financial sector and real estate industry. The stock has a beta of 1.08 and a short float of 28.7% with 22.02 days to cover. Shares are up 7.3% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Walter Investment Management as a

sell

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

Highlights from the ratings report include:

  • 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 Capital Markets industry. The net income has significantly decreased by 197.4% when compared to the same quarter one year ago, falling from $72.69 million to -$70.80 million.
  • 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 Capital Markets industry and the overall market, WALTER INVESTMENT MGMT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WALTER INVESTMENT MGMT CORP is rather low; currently it is at 23.74%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.34% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 51.94%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 198.94% 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.
  • WALTER INVESTMENT MGMT 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WALTER INVESTMENT MGMT CORP turned its bottom line around by earning $6.64 versus -$0.59 in the prior year. For the next year, the market is expecting a contraction of 24.7% in earnings ($5.00 versus $6.64).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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