Trade-Ideas: Carbo Ceramics (CRR) Is Today's Weak 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 Carbo Ceramics ( CRR) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Carbo Ceramics as such a stock due to the following factors:

  • CRR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.3 million.
  • CRR has traded 157,759 shares today.
  • CRR is trading at 4.69 times the normal volume for the stock at this time of day.
  • CRR is trading at a new low 3.13% 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 CRR:

CARBO Ceramics Inc., an oilfield services technology company, manufactures and sells ceramic proppants, resin-coated ceramic, and resin-coated sand proppants for use in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. The stock currently has a dividend yield of 0.9%. CRR has a PE ratio of 119. Currently there are no analysts that rate Carbo Ceramics a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Carbo Ceramics has been 809,100 shares per day over the past 30 days. Carbo Ceramics has a market cap of $1.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.73 and a short float of 42% with 10.69 days to cover. Shares are up 9.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Carbo Ceramics as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • CRR's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $53.12 million or 20.41% when compared to the same quarter last year. In addition, CARBO CERAMICS INC has also modestly surpassed the industry average cash flow growth rate of 12.17%.
  • CRR, with its very weak revenue results, has greatly underperformed against the industry average of 1.6%. Since the same quarter one year prior, revenues plummeted by 50.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CARBO CERAMICS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CARBO CERAMICS INC reported lower earnings of $2.42 versus $3.68 in the prior year. For the next year, the market is expecting a contraction of 183.3% in earnings (-$2.02 versus $2.42).
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 255.2% when compared to the same quarter one year ago, falling from $18.43 million to -$28.60 million.

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