Strong On High Volume: Hyatt Hotels (H)

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

  • H has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.9 million.
  • H has traded 51,656 shares today.
  • H is trading at 4.47 times the normal volume for the stock at this time of day.
  • H 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 H:

Hyatt Hotels Corporation, a hospitality company, develops, owns, operates, manages, franchises, licenses, or provides services to full and select service hotels, resorts, and residential and vacation properties worldwide. H has a PE ratio of 28.8. Currently there are 9 analysts that rate Hyatt Hotels a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Hyatt Hotels has been 451,400 shares per day over the past 30 days. Hyatt Hotels has a market cap of $2.0 billion and is part of the services sector and leisure industry. The stock has a beta of 1.55 and a short float of 5.3% with 3.49 days to cover. Shares are down 3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hyatt Hotels as a buy. The company's strongest point has been its expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.2%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, H has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • HYATT HOTELS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HYATT HOTELS CORP increased its bottom line by earning $2.25 versus $1.30 in the prior year. For the next year, the market is expecting a contraction of 46.7% in earnings ($1.20 versus $2.25).
  • The gross profit margin for HYATT HOTELS CORP is rather low; currently it is at 22.01%. Regardless of H's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.08% trails 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 60.7% when compared to the same quarter one year ago, falling from $56.00 million to $22.00 million.

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