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

  • DRIV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.0 million.
  • DRIV has traded 195,333 shares today.
  • DRIV is trading at 6.31 times the normal volume for the stock at this time of day.
  • DRIV is trading at a new low 5.12% 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 DRIV:

Digital River, Inc. provides end-to-end cloud-commerce, payments, and marketing solutions to various companies in the United States, Europe, the Asia Pacific, and South America. Currently there is 1 analyst that rates Digital River a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Digital River has been 519,000 shares per day over the past 30 days. Digital River has a market cap of $810.6 million and is part of the technology sector and internet industry. The stock has a beta of 1.79 and a short float of 5% with 1.52 days to cover. Shares are up 38.1% 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 Digital River as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 154.16% and other important driving factors, this stock has surged by 47.61% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • DIGITAL RIVER 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIGITAL RIVER INC continued to lose money by earning -$0.57 versus -$5.61 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus -$0.57).
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DRIV's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.96 is high and demonstrates strong liquidity.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, DIGITAL RIVER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $5.53 million or 69.91% 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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