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

  • NQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.0 million.
  • NQ has traded 1.1 million shares today.
  • NQ is trading at 2.01 times the normal volume for the stock at this time of day.
  • NQ is trading at a new low 4.00% 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 NQ:

NQ Mobile Inc. provides mobile Internet services in the People's Republic of China and internationally. The company provides products and services in the areas of mobile security, privacy, productivity, personalized cloud, and family protection.

The average volume for NQ Mobile has been 3.7 million shares per day over the past 30 days. NQ Mobile has a market cap of $208.8 million and is part of the technology sector and computer software & services industry. Shares are down 68.2% 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 NQ Mobile as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, 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 Software industry. The net income has significantly decreased by 187.8% when compared to the same quarter one year ago, falling from $4.87 million to -$4.28 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, NQ MOBILE INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 177.77% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • NQ MOBILE INC -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, NQ MOBILE INC -ADR swung to a loss, reporting -$0.04 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus -$0.04).
  • The gross profit margin for NQ MOBILE INC -ADR is rather high; currently it is at 51.61%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NQ's net profit margin of -6.30% significantly underperformed when compared to the industry average.

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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