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

  • CBD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.2 million.
  • CBD has traded 168,520 shares today.
  • CBD is trading at 2.38 times the normal volume for the stock at this time of day.
  • CBD is trading at a new low 3.06% 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 CBD:

Companhia Brasileira de Distribuicao engages in the retail of food, clothing, home appliances, electronics, and other products through its chain of hypermarkets, supermarkets, specialized stores, and department stores primarily in Brazil. The stock currently has a dividend yield of 2.7%. CBD has a PE ratio of 18.6. Currently there are 2 analysts that rate Companhia Brasileira De Distribuicao a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Companhia Brasileira De Distribuicao has been 642,400 shares per day over the past 30 days. Companhia Brasileira De Distribuicao has a market cap of $8.9 billion and is part of the services sector and retail industry. Shares are down 11.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Companhia Brasileira De Distribuicao as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 276.33% to $346.94 million when compared to the same quarter last year. In addition, CIA BRASILEIRA DE DISTRIB has also vastly surpassed the industry average cash flow growth rate of 20.66%.
  • CBD, with its decline in revenue, underperformed when compared the industry average of 0.2%. Since the same quarter one year prior, revenues fell by 20.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food & Staples Retailing industry average. The net income has significantly decreased by 29.1% when compared to the same quarter one year ago, falling from $126.45 million to $89.68 million.
  • The gross profit margin for CIA BRASILEIRA DE DISTRIB is currently lower than what is desirable, coming in at 25.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.78% trails that of the industry average.

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