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

  • TEX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.7 million.
  • TEX has traded 549,082 shares today.
  • TEX is trading at 7.13 times the normal volume for the stock at this time of day.
  • TEX is trading at a new low 7.00% 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 TEX:

Terex Corporation operates as a lifting and material handling solutions company. The stock currently has a dividend yield of 0.8%. TEX has a PE ratio of 14. Currently there are 7 analysts that rate Terex a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Terex has been 2.0 million shares per day over the past 30 days. Terex has a market cap of $3.0 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 3.09 and a short float of 8.9% with 3.37 days to cover. Shares are up 0.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Terex as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.5%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.07, it is still below the industry average, suggesting that this level of debt is acceptable within the Machinery industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.88 is weak.
  • Net operating cash flow has significantly decreased to -$110.70 million or 539.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Machinery industry. The net income has significantly decreased by 97.1% when compared to the same quarter one year ago, falling from $35.00 million to $1.00 million.

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