Sally Beauty Holdings (SBH) Is Today's Strong On High Volume Stock

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

  • SBH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.9 million.
  • SBH has traded 273,068 shares today.
  • SBH is trading at 12.84 times the normal volume for the stock at this time of day.
  • SBH 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 SBH:

Sally Beauty Holdings, Inc., together with its subsidiaries, operates as a specialty retailer and distributor of professional beauty supplies primarily in North America, South America, and Europe. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group (BSG). SBH has a PE ratio of 20.7. Currently there are 9 analysts that rate Sally Beauty Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Sally Beauty Holdings has been 1.1 million shares per day over the past 30 days. Sally Beauty has a market cap of $5.0 billion and is part of the services sector and specialty retail industry. The stock has a beta of 0.81 and a short float of 4.7% with 5.32 days to cover. Shares are up 1.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sally Beauty Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • SALLY BEAUTY HOLDINGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SALLY BEAUTY HOLDINGS INC increased its bottom line by earning $1.51 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.51).
  • 49.12% is the gross profit margin for SALLY BEAUTY HOLDINGS INC 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 5.69% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has declined marginally to $57.04 million or 5.10% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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