Weak On High Volume: Frontier Communications (FTR)

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

  • FTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.5 million.
  • FTR has traded 920,591 shares today.
  • FTR is trading at 2.33 times the normal volume for the stock at this time of day.
  • FTR is trading at a new low 3.03% 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 FTR:

Frontier Communications Corporation, a communications company, provides regulated and unregulated voice, data, and video services to residential, business, and wholesale customers in the United States. The stock currently has a dividend yield of 5.8%. FTR has a PE ratio of 36.3. Currently there are 2 analysts that rate Frontier Communications a buy, 3 analysts rate it a sell, and 6 rate it a hold.

The average volume for Frontier Communications has been 8.4 million shares per day over the past 30 days. Frontier has a market cap of $6.9 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.54 and a short float of 15.2% with 18.47 days to cover. Shares are up 40.6% year-to-date as of the close of trading on Monday.

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 Frontier Communications as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Diversified Telecommunication Services industry average. The net income increased by 18.6% when compared to the same quarter one year prior, going from $35.40 million to $41.99 million.
  • Compared to its closing price of one year ago, FTR's share price has jumped by 48.92%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • 43.79% is the gross profit margin for FRONTIER COMMUNICATIONS CORP which we consider to be strong. Regardless of FTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.68% trails the industry average.
  • FRONTIER COMMUNICATIONS CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FRONTIER COMMUNICATIONS CORP reported lower earnings of $0.12 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.12).
  • FTR, with its decline in revenue, slightly underperformed the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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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