Trade-Ideas LLC identified

Wright Medical Group

(

WMGI

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

  • WMGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.7 million.
  • WMGI has traded 455,434 shares today.
  • WMGI is trading at 14.37 times the normal volume for the stock at this time of day.
  • WMGI is trading at a new low 3.02% 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 WMGI:

TheStreet Recommends

Wright Medical Group N.V., a medical device company, designs, manufactures, markets, and sells orthopaedic products in the United States, France, and internationally. Currently there are 8 analysts that rate Wright Medical Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Wright Medical Group has been 543,700 shares per day over the past 30 days. Wright Medical Group has a market cap of $2.2 billion and is part of the health care sector and health services industry. The stock has a beta of 0.38 and a short float of 29.9% with 7.84 days to cover. Shares are down 14.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Wright Medical Group as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 60.0% when compared to the same quarter one year ago, falling from -$61.81 million to -$98.86 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 Health Care Equipment & Supplies industry and the overall market, WRIGHT MEDICAL GROUP NV'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 -$90.84 million or 162.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 4.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.11, which shows the ability to cover short-term cash needs.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, WMGI has underperformed the S&P 500 Index, declining 20.26% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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