Today's Weak On High Volume Stock: Ocwen Financial (OCN)

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

  • OCN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.6 million.
  • OCN has traded 1.9 million shares today.
  • OCN is trading at 18.64 times the normal volume for the stock at this time of day.
  • OCN is trading at a new low 15.07% 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 OCN:

Ocwen Financial Corporation, through its subsidiaries, is engaged in the servicing and origination of mortgage loans in the United States and internationally. OCN has a PE ratio of 16.1. Currently there is 1 analyst that rates Ocwen Financial a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Ocwen Financial has been 3.3 million shares per day over the past 30 days. Ocwen Financial has a market cap of $2.7 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.46 and a short float of 15.9% with 5.89 days to cover. Shares are down 61.2% year-to-date as of the close of trading on Thursday.

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 Ocwen Financial as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 143.32% to $348.99 million when compared to the same quarter last year. In addition, OCWEN FINANCIAL CORP has also vastly surpassed the industry average cash flow growth rate of -9.65%.
  • Despite the weak revenue results, OCN has outperformed against the industry average of 23.7%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for OCWEN FINANCIAL CORP is currently very high, coming in at 74.21%. Regardless of OCN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OCN's net profit margin of -14.61% significantly underperformed when compared to the industry average.
  • 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 Thrifts & Mortgage Finance industry. The net income has significantly decreased by 224.4% when compared to the same quarter one year ago, falling from $60.57 million to -$75.38 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 61.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 248.71% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, OCN is still more expensive than most of the other companies in its industry.

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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