Vera Bradley (VRA) Stock: Weak On High Volume Today

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

  • VRA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.5 million.
  • VRA has traded 338,799 shares today.
  • VRA is trading at 6.40 times the normal volume for the stock at this time of day.
  • VRA is trading at a new low 4.03% 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 VRA:

Vera Bradley, Inc., together with its subsidiaries, designs, manufactures, and sells handbags, accessories, and luggage and travel items for women of all ages under the Vera Bradley brand. VRA has a PE ratio of 14. Currently there are 3 analysts that rate Vera Bradley a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Vera Bradley has been 587,700 shares per day over the past 30 days. Vera Bradley has a market cap of $576.1 million and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.59 and a short float of 78.5% with 14.48 days to cover. Shares are down 31.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vera Bradley 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • VRA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, VRA has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for VERA BRADLEY INC is rather high; currently it is at 55.23%. Regardless of VRA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRA's net profit margin of 11.36% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Textiles, Apparel & Luxury Goods industry average, but is greater than that of the S&P 500. The net income has decreased by 10.8% when compared to the same quarter one year ago, dropping from $19.45 million to $17.34 million.
  • Net operating cash flow has decreased to $47.56 million or 10.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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