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

  • OC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.8 million.
  • OC has traded 304,922 shares today.
  • OC is trading at 3.58 times the normal volume for the stock at this time of day.
  • OC is trading at a new low 3.04% 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 OC:

Owens Corning, together with its subsidiaries, produces and sells glass fiber reinforcements and other materials for composite systems; and residential and commercial building materials worldwide. It operates in three segments: Composites, Insulation, and Roofing. The stock currently has a dividend yield of 1.7%. OC has a PE ratio of 38. Currently there are 5 analysts that rate Owens-Corning a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Owens-Corning has been 1.8 million shares per day over the past 30 days. Owens-Corning has a market cap of $4.8 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.98 and a short float of 3.1% with 1.94 days to cover. Shares are up 14% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Owens-Corning as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to -$149.00 million or 45.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 33.40%.
  • OWENS CORNING has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OWENS CORNING increased its bottom line by earning $1.91 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $1.91).
  • OC, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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