E2open (EOPN) Stock: 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 E2open ( EOPN) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified E2open as such a stock due to the following factors:

  • EOPN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • EOPN has traded 81,081 shares today.
  • EOPN is trading at 7.45 times the normal volume for the stock at this time of day.
  • EOPN is trading at a new low 4.02% 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 EOPN:

E2open, Inc. provides cloud-based, on-demand software solutions for supply chain management. The company delivers its software solutions on an integrated platform that enables companies to collaborate with their trading partners to procure, manufacture, sell, and distribute products. Currently there are 5 analysts that rate E2open a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for E2open has been 421,700 shares per day over the past 30 days. E2open has a market cap of $212.6 million and is part of the technology sector and computer software & services industry. The stock has a beta of 1.70 and a short float of 17.8% with 8.46 days to cover. Shares are down 67.6% 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 E2open as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 Internet Software & Services industry. The net income has significantly decreased by 57.8% when compared to the same quarter one year ago, falling from -$5.92 million to -$9.35 million.
  • Net operating cash flow has significantly decreased to -$6.84 million or 67.33% 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 65.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.13% 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.
  • E2OPEN INC's earnings per share declined by 39.1% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, E2OPEN INC reported poor results of -$0.95 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings (-$0.59 versus -$0.95).
  • 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, E2OPEN 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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