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

  • FXCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.8 million.
  • FXCM has traded 379,506 shares today.
  • FXCM is trading at 3.08 times the normal volume for the stock at this time of day.
  • FXCM is trading at a new low 5.20% 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 FXCM:

FXCM Inc., through its subsidiaries, provides online foreign exchange (FX) trading and related services to retail and institutional customers worldwide. The company operates in two segments, Retail Trading and Institutional Trading. The stock currently has a dividend yield of 14.7%. Currently there are no analysts that rate FXCM a buy, 3 analysts rate it a sell, and 1 rates it a hold.

The average volume for FXCM has been 3.5 million shares per day over the past 30 days. FXCM has a market cap of $82.7 million and is part of the financial sector and financial services industry. The stock has a beta of 1.68 and a short float of 25.5% with 2.19 days to cover. Shares are down 90.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates FXCM as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • FXCM INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, FXCM INC reported lower earnings of $0.30 versus $0.48 in the prior year. For the next year, the market is expecting a contraction of 116.7% in earnings (-$0.05 versus $0.30).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 20649.7% when compared to the same quarter one year ago, falling from $2.08 million to -$426.82 million.
  • The gross profit margin for FXCM INC is currently extremely low, coming in at 2.79%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -608.05% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 89.86%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 41650.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • FXCM, with its decline in revenue, underperformed when compared the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 15.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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