Violin Memory (VMEM) Is Today's Strong On High Volume Stock

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

  • VMEM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • VMEM has traded 202,477 shares today.
  • VMEM is trading at 4.78 times the normal volume for the stock at this time of day.
  • VMEM is trading at a new high 4.24% 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 VMEM:

Violin Memory, Inc. develops and supplies memory-based storage systems to bring storage performance in line with high-speed applications, servers, and networks worldwide. Currently there is 1 analyst that rates Violin Memory a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Violin Memory has been 924,700 shares per day over the past 30 days. Violin Memory has a market cap of $303.9 million and is part of the technology sector and computer hardware industry. Shares are down 31.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Violin Memory as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 6.07 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.13, which shows the ability to cover short-term cash needs.
  • In its most recent trading session, VMEM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Computers & Peripherals industry average, but is greater than that of the S&P 500. The net income increased by 17.2% when compared to the same quarter one year prior, going from -$56.52 million to -$46.82 million.
  • The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues fell by 26.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for VIOLIN MEMORY INC is rather high; currently it is at 60.03%. Regardless of VMEM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VMEM's net profit margin of -228.17% significantly underperformed when compared to the industry average.

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Strong On High Relative Volume: Violin Memory (VMEM)

Strong On High Relative Volume: Violin Memory (VMEM)