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

  • DRYS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.9 million.
  • DRYS has traded 1.9 million shares today.
  • DRYS is trading at 2.55 times the normal volume for the stock at this time of day.
  • DRYS is trading at a new low 5.65% 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 DRYS:

DryShips Inc. provides ocean transportation services for drybulk and petroleum cargoes, and offshore drilling services. The company operates through Drybulk Carrier, Tanker, and Offshore Drilling segments. The stock currently has a dividend yield of 49.4%. Currently there is 1 analyst that rates DryShips a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for DryShips has been 12.8 million shares per day over the past 30 days. DryShips has a market cap of $460.6 million and is part of the services sector and transportation industry. The stock has a beta of 3.78 and a short float of 2.5% with 0.61 days to cover. Shares are down 74.3% 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 DryShips as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 25.2%. Since the same quarter one year prior, revenues rose by 48.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DRYSHIPS 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, DRYSHIPS INC continued to lose money by earning -$0.58 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings ($0.04 versus -$0.58).
  • The gross profit margin for DRYSHIPS INC is rather high; currently it is at 57.64%. 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 2.76% trails the industry average.
  • DRYS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 73.82%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The debt-to-equity ratio is very high at 2.21 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, DRYS has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity 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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