Weak On High Volume: Clean Diesel Technologies (CDTI)

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

  • CDTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.7 million.
  • CDTI has traded 2.2 million shares today.
  • CDTI is trading at 20.63 times the normal volume for the stock at this time of day.
  • CDTI is trading at a new low 14.29% 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 CDTI:

Clean Diesel Technologies, Inc. manufactures and distributes light duty vehicle catalysts and heavy duty diesel emissions control systems and products to automakers, distributors, integrators, and retrofitters in the United States, Canada, Sweden, and the United Kingdom. Currently there are 3 analysts that rate Clean Diesel Technologies a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Clean Diesel Technologies has been 362,100 shares per day over the past 30 days. Clean Diesel has a market cap of $29.1 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.50 and a short float of 5% with 0.31 days to cover. Shares are up 39.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Clean Diesel Technologies as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Auto Components industry average, but is greater than that of the S&P 500. The net income has decreased by 9.8% when compared to the same quarter one year ago, dropping from -$2.50 million to -$2.74 million.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CDTI maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Auto Components industry and the overall market, CLEAN DIESEL TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 25.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -31.62% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.69 million or 235.48% 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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