Weak On High Volume: QTS Realty (QTS)

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

  • QTS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.7 million.
  • QTS has traded 231,605 shares today.
  • QTS is trading at 2.65 times the normal volume for the stock at this time of day.
  • QTS 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 QTS:

QTS Realty Trust, Inc. focuses on the ownership, development, and operation of carrier-neutral data centers in the United States. The company was founded in 2013 and is headquartered in Overland Park, Kansas. The stock currently has a dividend yield of 3.4%. QTS has a PE ratio of 76. Currently there are 6 analysts that rate QTS Realty a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for QTS Realty has been 222,600 shares per day over the past 30 days. QTS has a market cap of $1.3 billion and is part of the financial sector and real estate industry. Shares are up 13.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates QTS Realty as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 25.4%. 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.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, QTS REALTY TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for QTS REALTY TRUST INC is rather low; currently it is at 16.91%. Regardless of QTS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, QTS's net profit margin of 6.64% is significantly lower than the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 2.8% when compared to the same quarter one year ago, dropping from $4.20 million to $4.08 million.

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