Inphi (IPHI) Weak On High Volume Today

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

  • IPHI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.4 million.
  • IPHI has traded 121,751 shares today.
  • IPHI is trading at 3.14 times the normal volume for the stock at this time of day.
  • IPHI 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 IPHI:

Inphi Corporation provides high-speed analog and mixed signal semiconductor solutions for the communications, datacenter, and computing markets worldwide. Its analog and mixed signal semiconductor solutions offer high signal integrity at data speeds while reducing system power consumption. Currently there are 9 analysts that rate Inphi a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Inphi has been 500,900 shares per day over the past 30 days. Inphi has a market cap of $815.8 million and is part of the technology sector and electronics industry. The stock has a beta of 0.93 and a short float of 8.9% with 4.91 days to cover. Shares are up 14.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Inphi 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • IPHI's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 89.7%. 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.
  • IPHI 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 this, the company maintains a quick ratio of 3.56, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for INPHI CORP is rather high; currently it is at 61.12%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, IPHI's net profit margin of -16.40% significantly underperformed when compared 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 875.7% when compared to the same quarter one year ago, falling from -$1.00 million to -$9.71 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 Semiconductors & Semiconductor Equipment industry and the overall market, INPHI CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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