Entropic Communications (ENTR) Is Weak On High Volume Today

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

  • ENTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • ENTR has traded 137,590 shares today.
  • ENTR is trading at 2.82 times the normal volume for the stock at this time of day.
  • ENTR is trading at a new low 3.06% 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 ENTR:

Entropic Communications, Inc., a fabless semiconductor company, designs, develops, and markets semiconductor solutions to enable home entertainment. Currently there are 3 analysts that rate Entropic Communications a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Entropic Communications has been 693,900 shares per day over the past 30 days. Entropic has a market cap of $243.3 million and is part of the technology sector and electronics industry. The stock has a beta of 2.37 and a short float of 3.4% with 2.08 days to cover. Shares are down 37.5% year-to-date as of the close of trading on Tuesday.

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 Entropic Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, ENTROPIC COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$11.63 million or 347.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ENTR'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 35.84%, 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.
  • The revenue fell significantly faster than the industry average of 10.3%. Since the same quarter one year prior, revenues fell by 28.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ENTROPIC COMMUNICATIONS INC has improved earnings per share by 45.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENTROPIC COMMUNICATIONS INC swung to a loss, reporting -$0.73 versus $0.04 in the prior year. This year, the market expects an improvement in earnings (-$0.45 versus -$0.73).

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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