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

  • CSTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.4 million.
  • CSTM has traded 1.1 million shares today.
  • CSTM is trading at 21.89 times the normal volume for the stock at this time of day.
  • CSTM is trading at a new low 11.02% 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 CSTM:

Constellium N.V. is engaged in the design, manufacture, and sale of specialty rolled and extruded aluminum products. The company operates in three segments: Aerospace & Transportation, Packaging & Automotive Rolled Products, and Automotive Structures & Industry. Currently there are 6 analysts that rate Constellium a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Constellium has been 1.2 million shares per day over the past 30 days. Constellium has a market cap of $2.2 billion and is part of the industrial goods sector and industrial industry. Shares are down 9.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Constellium as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally high debt management risk.

Highlights from the ratings report include:
  • The gross profit margin for CONSTELLIUM NV is rather low; currently it is at 15.33%. Regardless of CSTM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CSTM's net profit margin of 3.04% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 11.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CSTM's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has improved to $68.49 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • The stock has risen over the past year and, it has performed in line with the S&P 500 thus far. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
  • CONSTELLIUM NV has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.30 versus $1.28).

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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