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

  • TKR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.6 million.
  • TKR has traded 65,364 shares today.
  • TKR is trading at 3.81 times the normal volume for the stock at this time of day.
  • TKR is trading at a new low 3.01% 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 TKR:

The Timken Company engineers, manufactures, and markets mechanical components, and bearings worldwide. It operates in three segments: Mobile Industries, Process Industries, and Aerospace. The stock currently has a dividend yield of 2.4%. TKR has a PE ratio of 19.4. Currently there are 5 analysts that rate Timken a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Timken has been 775,800 shares per day over the past 30 days. Timken has a market cap of $3.7 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.11 and a short float of 2.7% with 2.56 days to cover. Shares are down 1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Timken as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • TKR's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has decreased to $79.30 million or 29.38% 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 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 Machinery industry. The net income has significantly decreased by 141.9% when compared to the same quarter one year ago, falling from $52.20 million to -$21.90 million.

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