United Breweries (CCU) Flagged As Strong On High Volume

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 United Breweries ( CCU) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified United Breweries as such a stock due to the following factors:

  • CCU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • CCU has traded 101,479 shares today.
  • CCU is trading at 13.63 times the normal volume for the stock at this time of day.
  • CCU is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 CCU:

Compania Cervecerias Unidas S.A., through its subsidiaries, produces, bottles, sells, and distributes beverages primarily in Chile, Argentina, Uruguay, and Paraguay. The company operates through Chile, Rio de la Plata, and Wine segments. The stock currently has a dividend yield of 1.5%. CCU has a PE ratio of 33.9. Currently there is 1 analyst that rates United Breweries a buy, 3 analysts rate it a sell, and none rate it a hold.

The average volume for United Breweries has been 132,400 shares per day over the past 30 days. United Breweries has a market cap of $3.9 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 12.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates United Breweries 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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • CCU's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 0.2%. 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.
  • CCU's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The gross profit margin for COMPANIA CERVECERIAS UNIDAS is rather high; currently it is at 60.32%. Regardless of CCU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.28% trails the industry average.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CCU has underperformed the S&P 500 Index, declining 6.49% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Beverages industry and the overall market, COMPANIA CERVECERIAS UNIDAS's return on equity is below that of both the industry average and the S&P 500.

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