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

  • NSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.5 million.
  • NSM has traded 757,360 shares today.
  • NSM is trading at 11.80 times the normal volume for the stock at this time of day.
  • NSM is trading at a new low 19.07% 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 NSM:

Nationstar Mortgage Holdings Inc. provides servicing, origination, and transaction based services to single-family residences in the United States. It operates in three segments: Servicing, Originations, and Solutionstar. NSM has a PE ratio of 10.5. Currently there are 3 analysts that rate Nationstar Mortgage Holdings a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Nationstar Mortgage Holdings has been 1.1 million shares per day over the past 30 days. Nationstar has a market cap of $2.4 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.71 and a short float of 38.4% with 11.59 days to cover. Shares are down 8.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nationstar Mortgage Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NATIONSTAR MORTGAGE HOLDINGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NATIONSTAR MORTGAGE HOLDINGS increased its bottom line by earning $2.44 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.44).
  • Net operating cash flow has significantly decreased to -$185.43 million or 126.96% when compared to the same quarter last year. Despite a decrease in cash flow of 126.96%, NATIONSTAR MORTGAGE HOLDINGS is still significantly exceeding the industry average of -182.79%.
  • The gross profit margin for NATIONSTAR MORTGAGE HOLDINGS is currently lower than what is desirable, coming in at 29.34%. Regardless of NSM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NSM's net profit margin of 3.80% is significantly lower than the industry average.

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