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

  • PXLW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.0 million.
  • PXLW has traded 150,757 shares today.
  • PXLW is trading at 5.85 times the normal volume for the stock at this time of day.
  • PXLW 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 PXLW:

Pixelworks, Inc. designs, develops, and markets video and pixel processing semiconductors, intellectual property cores, software, and custom ASIC solutions for digital video applications. Currently there are 3 analysts that rate Pixelworks a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Pixelworks has been 281,800 shares per day over the past 30 days. Pixelworks has a market cap of $148.9 million and is part of the technology sector and electronics industry. The stock has a beta of -0.19 and a short float of 11% with 2.70 days to cover. Shares are up 56.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pixelworks as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Semiconductors & Semiconductor Equipment industry average. The net income has significantly decreased by 34.2% when compared to the same quarter one year ago, falling from -$2.51 million to -$3.36 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, PIXELWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of PIXELWORKS INC has not done very well: it is down 5.23% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • The gross profit margin for PIXELWORKS INC is rather high; currently it is at 56.04%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PXLW's net profit margin of -23.37% significantly underperformed when compared to the industry average.
  • PIXELWORKS INC's earnings per share declined by 27.3% in the most recent quarter compared to 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, PIXELWORKS INC continued to lose money by earning -$0.44 versus -$0.48 in the prior year. This year, the market expects an improvement in earnings (-$0.27 versus -$0.44).

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