Weak On High Volume: Criteo (CRTO)

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

  • CRTO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.5 million.
  • CRTO has traded 297,892 shares today.
  • CRTO is trading at 8.81 times the normal volume for the stock at this time of day.
  • CRTO is trading at a new low 6.02% 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 CRTO:

Criteo S.A., a technology company, engages in the digital performance marketing in France and internationally. The company leverages granular data to engage and convert customers on behalf of its advertiser clients. CRTO has a PE ratio of 116. Currently there are 6 analysts that rate Criteo a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Criteo has been 615,900 shares per day over the past 30 days. Criteo has a market cap of $3.1 billion and is part of the technology sector and internet industry. Shares are up 25.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Criteo as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 30.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although CRTO's debt-to-equity ratio of 0.03 is very low, it is currently higher than that of the industry average. To add to this, CRTO has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 38.88% is the gross profit margin for CRITEO SA which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CRTO's net profit margin of 7.84% significantly trails the industry average.
  • Powered by its strong earnings growth of 312.50% and other important driving factors, this stock has surged by 65.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • When compared to other companies in the Internet Software & Services industry and the overall market, CRITEO SA's return on equity is below that of both the industry average and the S&P 500.

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