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

  • DCTH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.1 million.
  • DCTH has traded 435,941 shares today.
  • DCTH is trading at 18.66 times the normal volume for the stock at this time of day.
  • DCTH is trading at a new low 8.33% 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 DCTH:

Delcath Systems, Inc. operates as a specialty pharmaceutical and medical device company focusing on cancers of the liver.

The average volume for Delcath Systems has been 278,700 shares per day over the past 30 days. Delcath Systems has a market cap of $14.5 million and is part of the health care sector and drugs industry. The stock has a beta of 1.71 and a short float of 2% with 0.10 days to cover. Shares are down 1.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Delcath Systems as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • DCTH'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 57.35%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, DELCATH SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 22.6%. Since the same quarter one year prior, revenues fell by 13.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • DCTH 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. Along with this, the company maintains a quick ratio of 4.51, which clearly demonstrates the ability to cover short-term cash needs.
  • DELCATH SYSTEMS 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 two years. During the past fiscal year, DELCATH SYSTEMS INC continued to lose money by earning -$1.95 versus -$5.12 in the prior year.

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