Strong On High Volume: USG (USG)

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

  • USG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.1 million.
  • USG has traded 277,537 shares today.
  • USG is trading at 3.93 times the normal volume for the stock at this time of day.
  • USG is trading at a new high 3.00% 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 USG:

USG Corporation, through its subsidiaries, operates as a manufacturer and distributor of building materials worldwide. USG has a PE ratio of 281. Currently there are 4 analysts that rate USG a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for USG has been 1.8 million shares per day over the past 30 days. USG has a market cap of $4.1 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.24 and a short float of 9.8% with 5.56 days to cover. Shares are up 1.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates USG as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • USG's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to -$42.00 million or 34.37% when compared to the same quarter last year. In addition, USG CORP has also modestly surpassed the industry average cash flow growth rate of 34.09%.
  • USG CORP's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, USG CORP reported lower earnings of $0.26 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $0.26).
  • 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 Building Products industry. The net income has significantly decreased by 46.7% when compared to the same quarter one year ago, falling from $45.00 million to $24.00 million.
  • The share price of USG CORP has not done very well: it is down 5.71% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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