Trade-Ideas: SeaWorld Entertainment (SEAS) Is Today's Strong On High Relative Volume Stock

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 SeaWorld Entertainment ( SEAS) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified SeaWorld Entertainment as such a stock due to the following factors:

  • SEAS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $192.9 million.
  • SEAS has traded 5.6 million shares today.
  • SEAS is trading at 2.95 times the normal volume for the stock at this time of day.
  • SEAS is trading at a new high 8.02% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 SEAS:

SeaWorld Entertainment, Inc. operates as a theme park and entertainment company in the United States. The stock currently has a dividend yield of 4.4%. SEAS has a PE ratio of 17.4. Currently there are 2 analysts that rate SeaWorld Entertainment a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for SeaWorld Entertainment has been 2.3 million shares per day over the past 30 days. SeaWorld Entertainment has a market cap of $1.7 billion and is part of the services sector and leisure industry. Shares are down 33.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SeaWorld Entertainment as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • SEAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 48.49%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, SEAWORLD ENTERTAINMENT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • SEAWORLD ENTERTAINMENT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.57 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.57).
  • 45.00% is the gross profit margin for SEAWORLD ENTERTAINMENT INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.21% trails the industry average.

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