Strong On High Volume: AU Optronics (AUO)

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

  • AUO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.0 million.
  • AUO has traded 220,332 shares today.
  • AUO is trading at 2.15 times the normal volume for the stock at this time of day.
  • AUO is trading at a new high 3.04% 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 AUO:

AU Optronics Corp. engages in the research, development, production, and sale of thin film transistor liquid crystal displays (TFT-LCDs) and other flat panel displays. It operates through two segments, Display and Solar. The stock currently has a dividend yield of 0.1%. AUO has a PE ratio of 39. Currently there are no analysts that rate AU Optronics a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for AU Optronics has been 1.6 million shares per day over the past 30 days. AU Optronics has a market cap of $5.2 billion and is part of the technology sector and electronics industry. Shares are up 6.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AU Optronics as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 1200.00% and other important driving factors, this stock has surged by 42.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although AUO had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • AU OPTRONICS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AU OPTRONICS CORP increased its bottom line by earning $0.53 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.58 versus $0.53).
  • AUO, with its decline in revenue, underperformed when compared the industry average of 0.0%. Since the same quarter one year prior, revenues fell by 11.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for AU OPTRONICS CORP is currently lower than what is desirable, coming in at 27.93%. Regardless of AUO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.57% trails the industry average.
  • Net operating cash flow has decreased to $510.71 million or 20.18% when compared to the same quarter last year. Despite a decrease in cash flow of 20.18%, AU OPTRONICS CORP is in line with the industry average cash flow growth rate of -27.06%.

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