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

  • SCMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.7 million.
  • SCMP has traded 85,363 shares today.
  • SCMP is trading at 2.68 times the normal volume for the stock at this time of day.
  • SCMP is trading at a new low 5.06% 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 SCMP:

Sucampo Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research and development of proprietary drugs in the Americas, Europe, and Asia. SCMP has a PE ratio of 4. Currently there is 1 analyst that rates Sucampo Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Sucampo Pharmaceuticals has been 605,500 shares per day over the past 30 days. Sucampo has a market cap of $748.7 million and is part of the health care sector and drugs industry. The stock has a beta of 2.11 and a short float of 15.4% with 4.18 days to cover. Shares are up 12.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sucampo Pharmaceuticals as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SCMP's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.81, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Pharmaceuticals industry and the overall market, SUCAMPO PHARMACEUTICALS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • SUCAMPO PHARMACEUTICALS INC 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. During the past fiscal year, SUCAMPO PHARMACEUTICALS INC increased its bottom line by earning $0.30 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.30).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 747.6% when compared to the same quarter one year prior, rising from $0.76 million to $6.41 million.

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