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

  • ARAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.0 million.
  • ARAY has traded 226,617 shares today.
  • ARAY is trading at 3.42 times the normal volume for the stock at this time of day.
  • ARAY is trading at a new low 3.01% 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 ARAY:

Accuray Incorporated designs, develops, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. Currently there are 5 analysts that rate Accuray a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Accuray has been 1.5 million shares per day over the past 30 days. Accuray has a market cap of $508.7 million and is part of the health care sector and health services industry. The stock has a beta of 0.70 and a short float of 25.4% with 4.98 days to cover. Shares are down 14.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Accuray as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:
  • ARAY's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ACCURAY INC has improved earnings per share by 33.3% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ACCURAY INC continued to lose money by earning -$0.47 versus -$1.32 in the prior year. For the next year, the market is expecting a contraction of 4.3% in earnings (-$0.49 versus -$0.47).
  • ARAY has underperformed the S&P 500 Index, declining 16.75% from its price level of one year ago. 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ACCURAY INC's return on equity significantly trails that of both the industry average and the S&P 500.

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