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

  • CLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.6 million.
  • CLD has traded 342,363 shares today.
  • CLD is trading at 5.89 times the normal volume for the stock at this time of day.
  • CLD is trading at a new low 8.15% 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 CLD:

Cloud Peak Energy Inc., through its subsidiaries, produces coal in the Powder River Basin (PRB) and the United States. The company operates through Owned and Operated Mines, Logistics and Related Activities, and Corporate and Other segments. CLD has a PE ratio of 4. Currently there are 6 analysts that rate Cloud Peak Energy a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Cloud Peak Energy has been 1.8 million shares per day over the past 30 days. Cloud Peak Energy has a market cap of $359.5 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.66 and a short float of 16.4% with 7.04 days to cover. Shares are down 37.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cloud Peak Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • CLD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 67.48%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The gross profit margin for CLOUD PEAK ENERGY INC is rather low; currently it is at 16.76%. Regardless of CLD'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 -1.47% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CLOUD PEAK ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • CLOUD PEAK ENERGY INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CLOUD PEAK ENERGY INC increased its bottom line by earning $1.28 versus $0.85 in the prior year. For the next year, the market is expecting a contraction of 135.9% in earnings (-$0.46 versus $1.28).
  • Despite the weak revenue results, CLD has significantly outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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