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

  • BT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.5 million.
  • BT has traded 120,690 shares today.
  • BT is trading at 2.23 times the normal volume for the stock at this time of day.
  • BT is trading at a new low 3.02% 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 BT:

BT Group plc provides communications services worldwide. The company operates through BT Global Services, BT Business, BT Consumer, BT Wholesale, and Openreach segments. The stock currently has a dividend yield of 2.5%. Currently there are 4 analysts that rate BT Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for BT Group has been 128,600 shares per day over the past 30 days. BT Group has a market cap of $58.6 billion and is part of the technology sector and telecommunications industry. Shares are up 16.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BT Group as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Compared to other companies in the Diversified Telecommunication Services industry and the overall market, BT GROUP PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 40.41% is the gross profit margin for BT GROUP PLC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.75% is above that of the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • BT GROUP PLC's earnings per share declined by 5.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BT GROUP PLC increased its bottom line by earning $4.22 versus $4.09 in the prior year. This year, the market expects an improvement in earnings ($4.57 versus $4.22).
  • BT, with its decline in revenue, underperformed when compared the industry average of 3.4%. Since the same quarter one year prior, revenues fell by 27.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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