EZCorp (EZPW) Highlighted As Weak On High Volume

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

  • EZPW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • EZPW has traded 150,987 shares today.
  • EZPW is trading at 8.53 times the normal volume for the stock at this time of day.
  • EZPW is trading at a new low 8.23% 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 EZPW:

EZCORP, Inc. provides specialty consumer financial services. The company operates in three segments: The U.S. & Canada, Latin America, and Other International. EZPW has a PE ratio of 14. Currently there are no analysts that rate EZCorp a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for EZCorp has been 358,700 shares per day over the past 30 days. EZCorp has a market cap of $456.1 million and is part of the financial sector and financial services industry. The stock has a beta of 1.80 and a short float of 13.4% with 16.76 days to cover. Shares are down 23.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EZCorp 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 expanding profit margins. 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:
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.52, which clearly demonstrates the ability to cover short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.6%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for EZCORP INC is rather high; currently it is at 65.54%. Regardless of EZPW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EZPW's net profit margin of 6.04% is significantly lower than the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Consumer Finance industry average. The net income has significantly decreased by 32.4% when compared to the same quarter one year ago, falling from $22.57 million to $15.26 million.
  • The share price of EZCORP INC has not done very well: it is down 12.27% 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, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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