Strong On High Relative Volume: Chuy's Holdings (CHUY)

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 Chuy's Holdings ( CHUY) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Chuy's Holdings as such a stock due to the following factors:

  • CHUY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.4 million.
  • CHUY has traded 63,091 shares today.
  • CHUY is trading at 2.56 times the normal volume for the stock at this time of day.
  • CHUY is trading at a new high 5.08% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 CHUY:

Chuy's Holdings, Inc., through its subsidiary, Chuy's Opco, Inc., owns and operates restaurants under the Chuy's name in Texas and 13 states in the southeastern and midwestern United States. The company's restaurants provide Mexican and Tex Mex inspired food. CHUY has a PE ratio of 43.2. Currently there are 3 analysts that rate Chuy's Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Chuy's Holdings has been 239,100 shares per day over the past 30 days. Chuy's has a market cap of $475.6 million and is part of the services sector and leisure industry. The stock has a beta of 1.32 and a short float of 15.5% with 8.12 days to cover. Shares are down 20.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Chuy's Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins 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 5.6%. Since the same quarter one year prior, revenues rose by 18.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CHUY'S HOLDINGS INC has improved earnings per share by 10.5% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, CHUY'S HOLDINGS INC increased its bottom line by earning $0.67 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.67).
  • CHUY's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • CHUY has underperformed the S&P 500 Index, declining 24.55% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for CHUY'S HOLDINGS INC is rather low; currently it is at 19.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.44% trails that of the industry average.

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