ServiceSource International (SREV) Is Today's Strong On High 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 ServiceSource International ( SREV) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified ServiceSource International as such a stock due to the following factors:

  • SREV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.9 million.
  • SREV has traded 182,190 shares today.
  • SREV is trading at 4.50 times the normal volume for the stock at this time of day.
  • SREV is trading at a new high 3.16% 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 SREV:

ServiceSource International, Inc. provides recurring revenue management, maintenance, support, and subscription for technology and technology-enabled healthcare and life sciences companies. Currently there are 3 analysts that rate ServiceSource International a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for ServiceSource International has been 1.2 million shares per day over the past 30 days. ServiceSource International has a market cap of $316.2 million and is part of the technology sector and computer software & services industry. The stock has a beta of 1.50 and a short float of 12.5% with 4.74 days to cover. Shares are down 54.6% year-to-date as of the close of trading on Friday.

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 ServiceSource International 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, weak operating cash flow 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 IT Services industry. The net income has significantly decreased by 329.9% when compared to the same quarter one year ago, falling from -$4.91 million to -$21.09 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 IT Services industry and the overall market, SERVICESOURCE INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SERVICESOURCE INTL INC is currently lower than what is desirable, coming in at 31.47%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -31.95% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.11 million or 136.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 316.66% 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.

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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