Trade-Ideas LLC identified

Ultimate Software Group

(

ULTI

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

  • ULTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.5 million.
  • ULTI has traded 88,935 shares today.
  • ULTI is trading at 13.60 times the normal volume for the stock at this time of day.
  • ULTI is trading at a new low 3.39% 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 ULTI:

The Ultimate Software Group, Inc. provides cloud-based human capital management solutions primarily to enterprise companies in the United States. Its UltiPro software solution delivers the functionality businesses to manage the employee life cycle from recruitment to retirement. ULTI has a PE ratio of 86. Currently there are 13 analysts that rate Ultimate Software Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ultimate Software Group has been 200,600 shares per day over the past 30 days. Ultimate Software Group has a market cap of $6.4 billion and is part of the technology sector and internet industry. The stock has a beta of 1.22 and a short float of 5.4% with 9.28 days to cover. Shares are up 13.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ultimate Software Group as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 29.2%. 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.
  • Net operating cash flow has increased to $32.06 million or 23.04% when compared to the same quarter last year. In addition, ULTIMATE SOFTWARE GROUP INC has also modestly surpassed the industry average cash flow growth rate of 22.08%.
  • The gross profit margin for ULTIMATE SOFTWARE GROUP INC is rather high; currently it is at 64.66%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ULTI's net profit margin of 1.30% significantly trails the industry average.
  • ULTI's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.16 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • ULTIMATE SOFTWARE GROUP INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ULTIMATE SOFTWARE GROUP INC reported lower earnings of $0.76 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($3.31 versus $0.76).

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