Mitek Systems (MITK) Highlighted As 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 Mitek Systems ( MITK) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Mitek Systems as such a stock due to the following factors:

  • MITK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.7 million.
  • MITK has traded 484,845 shares today.
  • MITK is trading at 12.15 times the normal volume for the stock at this time of day.
  • MITK is trading at a new low 4.02% 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 MITK:

Mitek Systems, Inc. develops, sells, and services software solutions related to mobile imaging in the Unites States. Currently there is 1 analyst that rates Mitek Systems a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Mitek Systems has been 359,900 shares per day over the past 30 days. Mitek Systems has a market cap of $72.3 million and is part of the technology sector and computer software & services industry. The stock has a beta of 3.36 and a short float of 23% with 2.62 days to cover. Shares are down 45.6% 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 Mitek Systems as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to $0.22 million or 73.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • MITK'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 56.86%, 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. 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.
  • 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 Software industry and the overall market, MITEK SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MITEK SYSTEMS INC is currently very high, coming in at 89.48%. Regardless of MITK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MITK's net profit margin of -35.04% significantly underperformed when compared to the industry average.
  • MITK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.93, which clearly demonstrates the ability to cover short-term cash needs.

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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