Trade-Ideas: Nuance Communications (NUAN) Is Today's Strong On High Relative 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 Nuance Communications ( NUAN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Nuance Communications as such a stock due to the following factors:

  • NUAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.3 million.
  • NUAN has traded 2.1 million shares today.
  • NUAN is trading at 24.57 times the normal volume for the stock at this time of day.
  • NUAN is trading at a new high 8.03% 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 NUAN:

Nuance Communications, Inc. provides voice and language solutions for businesses and consumers worldwide. Currently there are 2 analysts that rate Nuance Communications a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Nuance Communications has been 1.9 million shares per day over the past 30 days. Nuance has a market cap of $5.0 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.99 and a short float of 5.6% with 6.40 days to cover. Shares are up 7.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nuance Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • NUAN's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 8.9% when compared to the same quarter one year prior, going from -$55.41 million to -$50.50 million.
  • NUAN's debt-to-equity ratio of 0.84 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that NUAN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.65 is high and demonstrates strong liquidity.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, NUANCE COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, NUAN 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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