Today's Weak On High Volume Stock: Liquidity Service (LQDT)

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

  • LQDT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.7 million.
  • LQDT has traded 337,618 shares today.
  • LQDT is trading at 39.19 times the normal volume for the stock at this time of day.
  • LQDT is trading at a new low 25.05% 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 LQDT:

Liquidity Services, Inc. operates online auction marketplaces for sellers and buyers of surplus, salvage, and scrap assets in the United States. LQDT has a PE ratio of 10.5. Currently there is 1 analyst that rates Liquidity Service a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Liquidity Service has been 342,000 shares per day over the past 30 days. Liquidity Service has a market cap of $305.2 million and is part of the services sector and retail industry. The stock has a beta of -0.96 and a short float of 11.6% with 8.88 days to cover. Shares are down 55.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Liquidity Service as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • LQDT 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.79 is somewhat weak and could be cause for future problems.
  • The revenue fell significantly faster than the industry average of 28.1%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for LIQUIDITY SERVICES INC is rather low; currently it is at 24.39%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.59% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $6.76 million or 77.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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