Today's Weak On High Volume Stock: Navistar International (NAV)

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

  • NAV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.8 million.
  • NAV has traded 318,545 shares today.
  • NAV is trading at 12.20 times the normal volume for the stock at this time of day.
  • NAV is trading at a new low 7.09% 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 NAV:

Navistar International Corporation manufactures and sells commercial and military trucks, diesel engines, and school and commercial buses; and provides service parts for trucks and diesel engines worldwide. Currently there are 7 analysts that rate Navistar International a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Navistar International has been 749,200 shares per day over the past 30 days. Navistar International has a market cap of $2.2 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 3.12 and a short float of 30.1% with 8.62 days to cover. Shares are down 19.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Navistar International as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$211.00 million or 126.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for NAVISTAR INTERNATIONAL CORP is rather low; currently it is at 19.33%. Regardless of NAV's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NAV's net profit margin of -1.73% significantly underperformed when compared to the industry average.
  • NAV has underperformed the S&P 500 Index, declining 20.83% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • NAVISTAR INTERNATIONAL CORP 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NAVISTAR INTERNATIONAL CORP continued to lose money by earning -$7.65 versus -$10.65 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus -$7.65).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 83.1% when compared to the same quarter one year prior, rising from -$248.00 million to -$42.00 million.

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