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

  • SKUL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.8 million.
  • SKUL has traded 112,329 shares today.
  • SKUL is trading at 2.90 times the normal volume for the stock at this time of day.
  • SKUL is trading at a new low 3.11% 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 SKUL:

Skullcandy Inc. designs, markets, and distributes audio and gaming headphones, earbuds, speakers, and other accessories under the Skullcandy, Astro Gaming, and 2XL brands in the United States and internationally. SKUL has a PE ratio of 31. Currently there are 7 analysts that rate Skullcandy a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Skullcandy has been 397,600 shares per day over the past 30 days. Skullcandy has a market cap of $231.2 million and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.30 and a short float of 5% with 1.34 days to cover. Shares are down 11.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Skullcandy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 18.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SKUL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SKUL has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SKULLCANDY INC's earnings per share declined by 8.3% in the most recent quarter compared to the same quarter a year ago. 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, SKULLCANDY INC turned its bottom line around by earning $0.27 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus $0.27).
  • Net operating cash flow has significantly decreased to -$0.96 million or 110.03% when compared to the same quarter last year. Despite a decrease in cash flow of 110.03%, SKULLCANDY INC is still significantly exceeding the industry average of -575.97%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income has decreased by 7.7% when compared to the same quarter one year ago, dropping from -$3.46 million to -$3.73 million.

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