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

  • VVUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.0 million.
  • VVUS has traded 401,524 shares today.
  • VVUS is trading at 2.05 times the normal volume for the stock at this time of day.
  • VVUS is trading at a new low 4.20% 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 VVUS:

VIVUS, Inc., a biopharmaceutical company, develops and commercializes therapies to address unmet needs in obesity, sleep apnea, diabetes, and sexual health in the United States and the European Union. Currently there are no analysts that rate Vivus a buy, 4 analysts rate it a sell, and 2 rate it a hold.

The average volume for Vivus has been 1.9 million shares per day over the past 30 days. Vivus has a market cap of $310.5 million and is part of the health care sector and drugs industry. The stock has a beta of 2.34 and a short float of 36.8% with 14.32 days to cover. Shares are down 67.4% year-to-date as of the close of trading on Friday.

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 Vivus as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to -$14.11 million or 29.63% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.78, which shows the ability to cover short-term cash needs.
  • VVUS'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 67.82%, 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, VIVUS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VIVUS INC is currently very high, coming in at 79.21%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VVUS's net profit margin of -46.71% 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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