Renewable Energy Group (REGI) Stock: Weak On High Volume Today

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

  • REGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.5 million.
  • REGI has traded 130,223 shares today.
  • REGI is trading at 8.07 times the normal volume for the stock at this time of day.
  • REGI is trading at a new low 3.02% 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 REGI:

Renewable Energy Group, Inc. produces and sells biofuels and renewable chemicals in the United States. It operates through two segments, Biomass-Based Diesel and Services. REGI has a PE ratio of 9. Currently there is 1 analyst that rates Renewable Energy Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Renewable Energy Group has been 355,300 shares per day over the past 30 days. Renewable Energy Group has a market cap of $467.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.16 and a short float of 9.5% with 5.87 days to cover. Shares are up 27.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Renewable Energy Group 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 disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1515.4% when compared to the same quarter one year ago, falling from -$2.36 million to -$38.11 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, RENEWABLE ENERGY GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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