Weak On High Volume: Matrix Service (MTRX)

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

  • MTRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.0 million.
  • MTRX has traded 933,501 shares today.
  • MTRX is trading at 66.41 times the normal volume for the stock at this time of day.
  • MTRX is trading at a new low 26.09% 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 MTRX:

Matrix Service Company provides engineering, fabrication, infrastructure, construction, and maintenance services primarily to the oil, gas, power, petrochemical, industrial, and mining and minerals markets principally in the United States and Canada. MTRX has a PE ratio of 21.4. Currently there are 3 analysts that rate Matrix Service a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Matrix Service has been 268,600 shares per day over the past 30 days. Matrix Service has a market cap of $750.4 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 2.67 and a short float of 2.3% with 2.66 days to cover. Shares are up 19.2% year-to-date as of the close of trading on Wednesday.

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 Matrix Service as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • MTRX's very impressive revenue growth greatly exceeded the industry average of 20.4%. Since the same quarter one year prior, revenues leaped by 68.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MTRX's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • MATRIX SERVICE CO reported significant earnings per share improvement 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, MATRIX SERVICE CO increased its bottom line by earning $0.92 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $0.92).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 74.8% when compared to the same quarter one year prior, rising from $6.52 million to $11.40 million.
  • Powered by its strong earnings growth of 68.00% and other important driving factors, this stock has surged by 76.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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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