Aruba Networks (ARUN) Highlighted As Weak On High Volume

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

  • ARUN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.3 million.
  • ARUN has traded 2.4 million shares today.
  • ARUN is trading at 23.03 times the normal volume for the stock at this time of day.
  • ARUN is trading at a new low 10.05% 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 ARUN:

Aruba Networks, Inc. provides enterprise mobility solutions worldwide. Currently there are 11 analysts that rate Aruba Networks a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Aruba Networks has been 2.0 million shares per day over the past 30 days. Aruba has a market cap of $2.4 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 2.60 and a short float of 9.2% with 7.51 days to cover. Shares are up 21.8% 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 Aruba Networks as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 32.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARUN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, ARUN has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for ARUBA NETWORKS INC is currently very high, coming in at 72.85%. Regardless of ARUN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARUN's net profit margin of -2.01% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $30.73 million or 32.18% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ARUBA NETWORKS INC has marginally lower results.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, ARUBA NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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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