Today's Weak On High Volume Stock: Financial Engines (FNGN)

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

  • FNGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.8 million.
  • FNGN has traded 463,252 shares today.
  • FNGN is trading at 46.20 times the normal volume for the stock at this time of day.
  • FNGN is trading at a new low 25.43% 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 FNGN:

Financial Engines, Inc., together with its subsidiaries, provides independent, technology-enabled portfolio management services, investment advice, and retirement income services to participants in employer-sponsored defined contribution plans in the United States. The stock currently has a dividend yield of 0.6%. FNGN has a PE ratio of 60.9. Currently there are 2 analysts that rate Financial Engines a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Financial Engines has been 358,500 shares per day over the past 30 days. Financial Engines has a market cap of $2.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.15 and a short float of 18.9% with 29.53 days to cover. Shares are down 41.3% year-to-date as of the close of trading on Thursday.

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 Financial Engines as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FINANCIAL ENGINES INC reported significant earnings per share improvement 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, FINANCIAL ENGINES INC increased its bottom line by earning $0.56 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus $0.56).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, FINANCIAL ENGINES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has declined marginally to $19.85 million or 3.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • FNGN'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 30.18%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FNGN is still more expensive than most of the other companies in its industry.

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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