Weak On High Volume: SolarCity (SCTY)

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

  • SCTY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $233.3 million.
  • SCTY has traded 469,308 shares today.
  • SCTY is trading at 2.48 times the normal volume for the stock at this time of day.
  • SCTY 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SCTY with the Ticky from Trade-Ideas. See the FREE profile for SCTY NOW at Trade-Ideas

More details on SCTY:

SolarCity Corporation designs, installs, and sells or leases solar energy systems to residential and commercial customers, and government entities in the United States. Currently there are 5 analysts that rate SolarCity a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for SolarCity has been 4.7 million shares per day over the past 30 days. SolarCity has a market cap of $6.6 billion and is part of the technology sector and electronics industry. Shares are up 30.2% 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 SolarCity as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Electrical Equipment industry. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from -$39.46 million to -$47.65 million.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, SCTY maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to -$36.49 million or 149.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SOLARCITY CORP reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SOLARCITY CORP reported poor results of -$0.80 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 406.3% in earnings (-$4.05 versus -$0.80).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails 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.

null

More from Markets

Automakers Slump as Trump Tariffs Threaten Both Manufacturers and Consumers

Automakers Slump as Trump Tariffs Threaten Both Manufacturers and Consumers

Dow Tumbles as Trump Calls Off North Korea Summit

Dow Tumbles as Trump Calls Off North Korea Summit

Jim Cramer: Does Saudi Arabia Think Oil Prices Are Too High?

Jim Cramer: Does Saudi Arabia Think Oil Prices Are Too High?

Stocks Could Easily Crater Into Memorial Day Weekend

Stocks Could Easily Crater Into Memorial Day Weekend

Video: Here Is How Real Estate Investment Trusts Can Boost Your Portfolio

Video: Here Is How Real Estate Investment Trusts Can Boost Your Portfolio