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

  • SHLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.8 million.
  • SHLD has traded 744,792 shares today.
  • SHLD is trading at 10.38 times the normal volume for the stock at this time of day.
  • SHLD is trading at a new low 12.05% 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 SHLD:

Sears Holdings Corporation operates as a retailer in the United States. It operates in two segments, Kmart and Sears Domestic.

The average volume for Sears Holdings has been 644,000 shares per day over the past 30 days. Sears has a market cap of $4.2 billion and is part of the services sector and retail industry. The stock has a beta of 2.90 and a short float of 75.9% with 10.81 days to cover. Shares are up 18.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sears Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to $555.00 million or 1.42% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for SEARS HOLDINGS CORP is rather low; currently it is at 24.42%. Regardless of SHLD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.96% trails the industry average.
  • SHLD, with its decline in revenue, underperformed when compared the industry average of 1.8%. Since the same quarter one year prior, revenues fell by 23.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SEARS HOLDINGS CORP 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, SEARS HOLDINGS CORP reported poor results of -$15.83 versus -$12.86 in the prior year. This year, the market expects an improvement in earnings (-$9.32 versus -$15.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 55.6% when compared to the same quarter one year prior, rising from -$358.00 million to -$159.00 million.

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