Trade-Ideas: 21Vianet Group (VNET) 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 21Vianet Group ( VNET) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified 21Vianet Group as such a stock due to the following factors:

  • VNET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.5 million.
  • VNET has traded 204,679 shares today.
  • VNET is trading at 5.09 times the normal volume for the stock at this time of day.
  • VNET is trading at a new low 3.10% 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 VNET:

21Vianet Group, Inc. provides carrier-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small- to mid-sized enterprises in the People's Republic of China. Currently there are 4 analysts that rate 21Vianet Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for 21Vianet Group has been 725,200 shares per day over the past 30 days. 21Vianet Group has a market cap of $1.8 billion and is part of the technology sector and computer software & services industry. Shares are up 19.2% 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 21Vianet Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 36.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, VNET's share price has jumped by 95.80%, exceeding the performance of the broader market during that same time frame. Although VNET had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • 39.96% is the gross profit margin for 21VIANET GROUP 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 -9.48% is in-line with the industry average.
  • 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 Internet Software & Services industry and the overall market, 21VIANET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 45.7% when compared to the same quarter one year ago, falling from -$6.92 million to -$10.08 million.

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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