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

  • FRAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.7 million.
  • FRAN has traded 1.3 million shares today.
  • FRAN is trading at 106.04 times the normal volume for the stock at this time of day.
  • FRAN is trading at a new low 14.02% 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 FRAN:

Francesca's Holdings Corporation, through its subsidiaries, operates a chain of retail boutiques. It offers fashion apparel, jewelry, accessories, and gifts primarily for women between the ages of 18 and 35. FRAN has a PE ratio of 21. Currently there are 6 analysts that rate Francescas Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Francescas Holdings has been 641,300 shares per day over the past 30 days. Francescas has a market cap of $673.7 million and is part of the services sector and retail industry. The stock has a beta of 0.05 and a short float of 14.7% with 9.33 days to cover. Shares are down 3.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Francescas Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • FRAN's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 16.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FRAN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, FRAN has a quick ratio of 2.19, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has slightly increased to $23.63 million or 4.04% when compared to the same quarter last year. Despite an increase in cash flow, FRANCESCAS HOLDINGS CORP's cash flow growth rate is still lower than the industry average growth rate of 16.83%.
  • 48.99% is the gross profit margin for FRANCESCAS HOLDINGS CORP which we consider to be strong. Regardless of FRAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.54% trails the industry average.

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