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

  • STX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $126.8 million.
  • STX has traded 690,940 shares today.
  • STX is trading at 3.36 times the normal volume for the stock at this time of day.
  • STX is trading at a new low 3.01% 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 STX:

Seagate Technology Public Limited Company designs, manufactures, and sells electronic data storage products in the Asia Pacific, the Americas, and EMEA countries. The stock currently has a dividend yield of 3.8%. STX has a PE ratio of 1. Currently there are 11 analysts that rate Seagate Technology a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Seagate Technology has been 3.4 million shares per day over the past 30 days. Seagate Technology has a market cap of $18.1 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 2.35 and a short float of 8% with 11.80 days to cover. Shares are down 14.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Seagate Technology as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • SEAGATE TECHNOLOGY PLC's earnings per share declined by 24.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC reported lower earnings of $4.52 versus $4.79 in the prior year. This year, the market expects an improvement in earnings ($4.77 versus $4.52).
  • The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market, SEAGATE TECHNOLOGY PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, STX's quick ratio is somewhat strong at 1.44, demonstrating the ability to handle short-term liquidity needs.

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