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

  • RDC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.0 million.
  • RDC has traded 360,270 shares today.
  • RDC is trading at 3.75 times the normal volume for the stock at this time of day.
  • RDC is trading at a new low 3.04% 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 RDC:

Rowan Companies plc provides offshore oil and gas contract drilling services. It operates a fleet of 30 self-elevating mobile offshore jack-up drilling units, as well as 3 ultra-deepwater drill ships. The stock currently has a dividend yield of 2%. Currently there are 4 analysts that rate Rowan Companies a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for Rowan Companies has been 2.9 million shares per day over the past 30 days. Rowan Companies has a market cap of $2.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.34 and a short float of 6.9% with 2.63 days to cover. Shares are down 9.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 41.4%. 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.
  • 49.75% is the gross profit margin for ROWAN COMPANIES PLC which we consider to be strong. 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 -58.77% is in-line with the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.60, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.65 is very high and demonstrates very strong liquidity.
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 757.7% when compared to the same quarter one year ago, falling from $49.70 million to -$326.89 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 Energy Equipment & Services industry and the overall market, ROWAN COMPANIES PLC's return on equity significantly trails that of both the industry average and the S&P 500.

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