World Acceptance (WRLD) Weak On High Volume

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

  • WRLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.1 million.
  • WRLD has traded 133,637 shares today.
  • WRLD is trading at 2.37 times the normal volume for the stock at this time of day.
  • WRLD is trading at a new low 6.10% 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 WRLD:

World Acceptance Corporation is engaged in small-loan consumer finance business in the United States and Mexico. The company primarily offers short-term and medium-term consumer installment loans, as well as related credit insurance, and ancillary products and services to individuals. WRLD has a PE ratio of 9.2. Currently there is 1 analyst that rates World Acceptance a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for World Acceptance has been 125,800 shares per day over the past 30 days. World Acceptance has a market cap of $823.4 million and is part of the financial sector and financial services industry. The stock has a beta of 0.48 and a short float of 60.9% with 34.21 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Thursday.

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 World Acceptance as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • WRLD's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 3.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WORLD ACCEPTANCE CORP/DE has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WORLD ACCEPTANCE CORP/DE increased its bottom line by earning $9.17 versus $7.94 in the prior year. This year, the market expects an improvement in earnings ($10.70 versus $9.17).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Consumer Finance industry and the overall market, WORLD ACCEPTANCE CORP/DE's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Despite the current debt-to-equity ratio of 1.93, it is still below the industry average, suggesting that this level of debt is acceptable within the Consumer Finance industry.
  • WRLD has underperformed the S&P 500 Index, declining 5.26% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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