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

  • MLHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.7 million.
  • MLHR has traded 111,043 shares today.
  • MLHR is trading at 16.27 times the normal volume for the stock at this time of day.
  • MLHR is trading at a new low 8.07% 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 MLHR:

Herman Miller, Inc. is engaged in the research, design, manufacture, and distribution of office furniture systems, seating products, other freestanding furniture elements, textiles, and related services in the United States and internationally. The stock currently has a dividend yield of 1.9%. Currently there are 3 analysts that rate Herman Miller a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Herman Miller has been 367,700 shares per day over the past 30 days. Herman Miller has a market cap of $1.8 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.51 and a short float of 3% with 5.25 days to cover. Shares are up 2% year-to-date as of the close of trading on Tuesday.

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 Herman Miller as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • MLHR's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Commercial Services & Supplies industry average. The net income increased by 12.0% when compared to the same quarter one year prior, going from $22.50 million to $25.20 million.
  • Net operating cash flow has slightly increased to $42.00 million or 9.94% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.11%.
  • 39.36% is the gross profit margin for MILLER (HERMAN) INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.94% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that MLHR's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.

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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