Strong On High Relative Volume: Olympic Steel (ZEUS)

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 Olympic Steel ( ZEUS) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Olympic Steel as such a stock due to the following factors:

  • ZEUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • ZEUS has traded 53,441 shares today.
  • ZEUS is trading at 14.16 times the normal volume for the stock at this time of day.
  • ZEUS is trading at a new high 5.00% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 ZEUS:

Olympic Steel, Inc. processes and distributes metal products in the United States, Canada, Puerto Rico, Mexico, and internationally. It operates in two segments, Flat Products, and Tubular and Pipe Products. The stock currently has a dividend yield of 0.4%. Currently there are 2 analysts that rate Olympic Steel a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Olympic Steel has been 97,600 shares per day over the past 30 days. Olympic has a market cap of $208.8 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.96 and a short float of 8.1% with 3.85 days to cover. Shares are up 8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Olympic Steel as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Metals & Mining industry. The net income has significantly decreased by 61.5% when compared to the same quarter one year ago, falling from $2.78 million to $1.07 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, OLYMPIC STEEL INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for OLYMPIC STEEL INC is rather low; currently it is at 19.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.30% significantly trails the industry average.
  • The share price of OLYMPIC STEEL INC has not done very well: it is down 18.22% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • OLYMPIC STEEL 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OLYMPIC STEEL INC swung to a loss, reporting -$1.71 versus $0.70 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus -$1.71).

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