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

  • XOOM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.8 million.
  • XOOM has traded 109,320 shares today.
  • XOOM is trading at 4.63 times the normal volume for the stock at this time of day.
  • XOOM is trading at a new low 3.00% 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 XOOM:

Xoom Corporation provides digital consumer-to-consumer online money transfers services worldwide. The company offers money transfer services over the Internet or through a mobile device on its Website at xoom.com, or through its mobile application, the Xoom App. Currently there are 6 analysts that rate Xoom a buy, 2 analysts rate it a sell, and none rate it a hold.

The average volume for Xoom has been 425,300 shares per day over the past 30 days. Xoom has a market cap of $702.7 million and is part of the financial sector and financial services industry. The stock has a beta of 2.14 and a short float of 20% with 8.62 days to cover. Shares are up 10.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Xoom as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, 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 when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 458.8% when compared to the same quarter one year ago, falling from $0.35 million to -$1.26 million.
  • 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 Internet Software & Services industry and the overall market, XOOM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of XOOM CORP has not done very well: it is down 16.39% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • XOOM CORP 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, XOOM CORP swung to a loss, reporting -$0.69 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus -$0.69).
  • The gross profit margin for XOOM CORP is currently very high, coming in at 75.70%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.84% is in-line with the industry average.

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