Weak On High Volume: EnerNOC (ENOC)

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

  • ENOC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.6 million.
  • ENOC has traded 312,269 shares today.
  • ENOC is trading at 10.51 times the normal volume for the stock at this time of day.
  • ENOC is trading at a new low 6.07% 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 ENOC:

EnerNOC, Inc. provides energy intelligence software (EIS) and related solutions for commercial, institutional, and industrial customers. Currently there are 3 analysts that rate EnerNOC a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for EnerNOC has been 415,300 shares per day over the past 30 days. EnerNOC has a market cap of $335.9 million and is part of the services sector and diversified services industry. The stock has a beta of 0.69 and a short float of 9.4% with 3.54 days to cover. Shares are down 16.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EnerNOC as a hold. The company's strengths can be seen in multiple areas, such as its robust 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 a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 27.7%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.48, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ENOC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.43 is high and demonstrates strong liquidity.
  • The gross profit margin for ENERNOC INC is rather high; currently it is at 59.27%. Regardless of ENOC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ENOC's net profit margin of -58.26% significantly underperformed when compared to the industry average.
  • ENERNOC INC's earnings per share declined by 38.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ENERNOC INC reported lower earnings of $0.08 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 4106.3% in earnings (-$3.21 versus $0.08).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Software industry average. The net income has significantly decreased by 34.7% when compared to the same quarter one year ago, falling from -$19.88 million to -$26.78 million.

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