Weak On High Volume: General Cable (BGC)

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

  • BGC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.8 million.
  • BGC has traded 165,501 shares today.
  • BGC is trading at 9.11 times the normal volume for the stock at this time of day.
  • BGC is trading at a new low 5.04% 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 BGC:

General Cable Corporation designs, develops, manufactures, markets, and distributes copper, aluminum, and fiber optic wire and cable products for the energy, industrial, construction, and specialty and communications markets worldwide. The stock currently has a dividend yield of 3.4%. Currently there is 1 analyst that rates General Cable a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for General Cable has been 785,300 shares per day over the past 30 days. General Cable has a market cap of $1.0 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.17 and a short float of 7.9% with 5.07 days to cover. Shares are up 41.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates General Cable as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 87.9% when compared to the same quarter one year prior, rising from -$315.40 million to -$38.10 million.
  • Net operating cash flow has significantly increased by 376.05% to $98.00 million when compared to the same quarter last year. In addition, GENERAL CABLE CORP/DE has also vastly surpassed the industry average cash flow growth rate of -10.22%.
  • GENERAL CABLE CORP/DE reported significant earnings per share improvement 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, GENERAL CABLE CORP/DE reported poor results of -$12.83 versus -$0.38 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus -$12.83).
  • The debt-to-equity ratio is very high at 3.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BGC maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
  • 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 Electrical Equipment industry and the overall market, GENERAL CABLE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.

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