Today's Weak On High Volume Stock: NeuStar (NSR)

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

  • NSR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.0 million.
  • NSR has traded 102,567 shares today.
  • NSR is trading at 2.74 times the normal volume for the stock at this time of day.
  • NSR is trading at a new low 3.01% 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 NSR:

NeuStar, Inc. provides technology and directory services to customers pursuant to various private commercial and government contracts worldwide. The company operates in three segments: Carrier Services, Enterprise Services, and Information Services. NSR has a PE ratio of 11.4. Currently there is 1 analyst that rates NeuStar a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for NeuStar has been 1.1 million shares per day over the past 30 days. NeuStar has a market cap of $1.5 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.79 and a short float of 31.4% with 27.64 days to cover. Shares are down 45.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NeuStar as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 12.2%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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.
  • Even though the current debt-to-equity ratio is 1.46, it is still below the industry average, suggesting that this level of debt is acceptable within the IT Services industry. Despite the fact that NSR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.32 is high and demonstrates strong liquidity.
  • Net operating cash flow has declined marginally to $75.71 million or 8.74% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, NEUSTAR INC has marginally lower results.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the IT Services industry average. The net income has decreased by 15.1% when compared to the same quarter one year ago, dropping from $43.40 million to $36.85 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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