Trade-Ideas: Fairway Group Holdings (FWM) Is Today's Weak On High Relative Volume Stock

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

  • FWM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • FWM has traded 195,176 shares today.
  • FWM is trading at 6.35 times the normal volume for the stock at this time of day.
  • FWM is trading at a new low 5.13% 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 FWM:

Fairway Group Holdings Corp., together with its subsidiaries, operates as a food retailer. Currently there is 1 analyst that rates Fairway Group Holdings a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Fairway Group Holdings has been 534,600 shares per day over the past 30 days. Fairway Group has a market cap of $98.8 million and is part of the services sector and retail industry. Shares are down 81.4% year-to-date as of the close of trading on Friday.

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 Fairway Group Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food & Staples Retailing industry. The net income has significantly decreased by 41.0% when compared to the same quarter one year ago, falling from -$12.22 million to -$17.24 million.
  • The gross profit margin for FAIRWAY GROUP HOLDINGS is currently lower than what is desirable, coming in at 29.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.88% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$0.34 million or 105.19% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 82.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% compared to the year-earlier 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.
  • FAIRWAY GROUP HOLDINGS's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FAIRWAY GROUP HOLDINGS reported poor results of -$1.93 versus -$1.43 in the prior year. This year, the market expects an improvement in earnings (-$0.86 versus -$1.93).

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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