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

  • CRUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.1 million.
  • CRUS has traded 177,784 shares today.
  • CRUS is trading at 2.43 times the normal volume for the stock at this time of day.
  • CRUS 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 CRUS:

Cirrus Logic, Inc., a fabless semiconductor company, develops analog and mixed-signal integrated circuits (ICs) for a range of consumer and industrial markets. CRUS has a PE ratio of 14. Currently there are 3 analysts that rate Cirrus Logic a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Cirrus Logic has been 1.1 million shares per day over the past 30 days. Cirrus Logic has a market cap of $2.4 billion and is part of the technology sector and electronics industry. The stock has a beta of -0.08 and a short float of 4.4% with 2.79 days to cover. Shares are up 61.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cirrus Logic as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • CRUS's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 70.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CRUS's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CRUS has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 69.4% when compared to the same quarter one year prior, rising from $12.60 million to $21.35 million.
  • Powered by its strong earnings growth of 60.00% and other important driving factors, this stock has surged by 69.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CIRRUS LOGIC INC reported significant earnings per share improvement 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, CIRRUS LOGIC INC reported lower earnings of $0.84 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($2.38 versus $0.84).

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