Trade-Ideas: Ralph Lauren (RL) Is Today's Strong On High Relative Volume Stock

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

  • RL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $158.7 million.
  • RL has traded 309,843 shares today.
  • RL is trading at 2.62 times the normal volume for the stock at this time of day.
  • RL is trading at a new high 3.02% 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 RL:

Ralph Lauren Corporation designs, markets, and distributes lifestyle products worldwide. The company operates in three segments: Wholesale, Retail, and Licensing. The stock currently has a dividend yield of 1.6%. RL has a PE ratio of 16. Currently there are 3 analysts that rate Ralph Lauren a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Ralph Lauren has been 910,200 shares per day over the past 30 days. Ralph Lauren has a market cap of $7.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.11 and a short float of 4.8% with 2.27 days to cover. Shares are down 30.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ralph Lauren as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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:
  • RL's revenue growth trails the industry average of 11.0%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • RL's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for RALPH LAUREN CORP is rather high; currently it is at 55.38%. Regardless of RL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.57% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Textiles, Apparel & Luxury Goods industry average. The net income has decreased by 18.9% when compared to the same quarter one year ago, dropping from $153.00 million to $124.00 million.
  • Net operating cash flow has significantly decreased to $4.00 million or 97.27% 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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