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.

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

  • FRAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.0 million.
  • FRAN has traded 364,115 shares today.
  • FRAN is trading at 22.74 times the normal volume for the stock at this time of day.
  • FRAN is trading at a new low 3.03% 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 FRAN:

Francesca's Holdings Corporation, through its subsidiary, Francesca's Collections, Inc., operates a chain of retail boutiques. The company offers a selection of fashion apparel, jewelry, accessories, and gifts primarily for women between the ages of 18 and 35. FRAN has a PE ratio of 18.6. Currently there are 7 analysts that rate Francescas Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Francescas Holdings has been 578,600 shares per day over the past 30 days. Francescas has a market cap of $686.1 million and is part of the services sector and retail industry. The stock has a beta of 1.23 and a short float of 17.5% with 6.98 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Francescas Holdings 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 9.4%. 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.
  • FRAN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for FRANCESCAS HOLDINGS CORP is rather high; currently it is at 51.21%. Regardless of FRAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FRAN's net profit margin of 8.34% compares favorably 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 Specialty Retail industry. The net income has decreased by 16.1% when compared to the same quarter one year ago, dropping from $8.67 million to $7.27 million.
  • Net operating cash flow has decreased to $6.53 million or 10.84% 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.

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