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

  • JRJC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.1 million.
  • JRJC has traded 206,715 shares today.
  • JRJC is trading at 2.86 times the normal volume for the stock at this time of day.
  • JRJC is trading at a new low 8.07% 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 JRJC:

China Finance Online Co., Limited provides Web-based financial services in the People's Republic of China and Hong Kong.

The average volume for China Finance Online has been 631,300 shares per day over the past 30 days. China Finance Online has a market cap of $133.1 million and is part of the technology sector and internet industry. Shares are up 11.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates China Finance Online as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we find that the company's revenue growth has not been good.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 89.00% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • CHINA FINANCE ONLINE CO -ADR 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, CHINA FINANCE ONLINE CO -ADR continued to lose money by earning -$0.35 versus -$0.41 in the prior year.
  • The gross profit margin for CHINA FINANCE ONLINE CO -ADR is currently very high, coming in at 76.63%. Regardless of JRJC'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 19.24% trails the industry average.
  • The revenue fell significantly faster than the industry average of 5.8%. Since the same quarter one year prior, revenues fell by 29.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Internet Software & Services industry and the overall market, CHINA FINANCE ONLINE CO -ADR's return on equity significantly trails that of both the industry average and the S&P 500.

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