Today's Weak On High Volume Stock: Ford Motor (F)

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

  • F has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $439.8 million.
  • F has traded 19.1 million shares today.
  • F is trading at 14.08 times the normal volume for the stock at this time of day.
  • F 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 F:

Ford Motor Company develops, manufactures, distributes, and services vehicles, parts, and accessories worldwide. The company operates through two sectors, Automotive and Financial Services. The Automotive sector offers vehicles primarily under the Ford and Lincoln brand names. The stock currently has a dividend yield of 3.1%. F has a PE ratio of 10.0. Currently there are 8 analysts that rate Ford Motor a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Ford Motor has been 24.2 million shares per day over the past 30 days. Ford has a market cap of $62.2 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.21 and a short float of 2.1% with 2.36 days to cover. Shares are down 2.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ford Motor as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Automobiles industry average. The net income increased by 6.3% when compared to the same quarter one year prior, going from $1,233.00 million to $1,311.00 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.8%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • FORD MOTOR CO has improved earnings per share by 6.7% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FORD MOTOR CO increased its bottom line by earning $1.75 versus $1.42 in the prior year. For the next year, the market is expecting a contraction of 23.7% in earnings ($1.34 versus $1.75).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Automobiles industry and the overall market, FORD MOTOR CO's return on equity significantly exceeds that of both the industry average and the S&P 500.

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