Weak On High Volume: Good Times Restaurants (GTIM)

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

  • GTIM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.5 million.
  • GTIM has traded 51,370 shares today.
  • GTIM is trading at 5.03 times the normal volume for the stock at this time of day.
  • GTIM is trading at a new low 3.03% 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 GTIM:

Good Times Restaurants, Inc., through its subsidiary, Good Times Drive Thru Inc., develops, owns, operates, and franchises hamburger-oriented drive-through restaurants under the Good Times Burgers & Frozen Custard name in Colorado. Currently there are 4 analysts that rate Good Times Restaurants a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Good Times Restaurants has been 76,500 shares per day over the past 30 days. Good Times has a market cap of $85.8 million and is part of the services sector and leisure industry. The stock has a beta of 0.93 and a short float of 0.8% with 0.23 days to cover. Shares are up 30.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Good Times Restaurants 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 32.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GTIM's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.57, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to -$0.21 million or 172.20% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 83.8% when compared to the same quarter one year ago, falling from -$0.22 million to -$0.41 million.

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