Trade-Ideas: HMS Holdings (HMSY) Is Today's Weak 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 HMS Holdings ( HMSY) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified HMS Holdings as such a stock due to the following factors:

  • HMSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.5 million.
  • HMSY has traded 677,134 shares today.
  • HMSY is trading at 22.13 times the normal volume for the stock at this time of day.
  • HMSY is trading at a new low 10.04% 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 HMSY:

HMS Holdings Corp. provides cost containment services to government and private healthcare payers and sponsors. The company's services include co-ordination of benefits and program integrity services. HMSY has a PE ratio of 61.8. Currently there are 6 analysts that rate HMS Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for HMS Holdings has been 913,200 shares per day over the past 30 days. HMS has a market cap of $2.0 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.52 and a short float of 16.8% with 10.25 days to cover. Shares are down 0.4% year-to-date as of the close of trading on Tuesday.

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 HMS Holdings as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.42, which clearly demonstrates the ability to cover short-term cash needs.
  • 39.43% is the gross profit margin for HMS HOLDINGS CORP which we consider to be strong. Regardless of HMSY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.36% trails the industry average.
  • The share price of HMS HOLDINGS CORP has not done very well: it is down 10.36% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Health Care Technology industry and the overall market, HMS HOLDINGS CORP's return on equity is below that of both the industry average and the S&P 500.

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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