Benefitfocus (BNFT) Strong On High Relative 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 Benefitfocus ( BNFT) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Benefitfocus as such a stock due to the following factors:

  • BNFT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.1 million.
  • BNFT has traded 77,037 shares today.
  • BNFT is trading at 15.47 times the normal volume for the stock at this time of day.
  • BNFT is trading at a new high 10.07% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 BNFT:

Benefitfocus, Inc. provides cloud-based benefits software solutions for consumers, employers, insurance carriers, and brokers under a software-as-a-service model in the United States. Currently there are 6 analysts that rate Benefitfocus a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Benefitfocus has been 147,100 shares per day over the past 30 days. Benefitfocus has a market cap of $1.1 billion and is part of the technology sector and computer software & services industry. Shares are up 18.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Benefitfocus as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally high debt management risk and feeble growth in its earnings per share.

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 the Internet Software & Services industry average. The net income has decreased by 18.1% when compared to the same quarter one year ago, dropping from -$12.40 million to -$14.65 million.
  • Net operating cash flow has significantly decreased to -$6.18 million or 36423.52% 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 debt-to-equity ratio is very high at 2.38 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, BNFT has managed to keep a strong quick ratio of 1.87, which demonstrates the ability to cover short-term cash needs.
  • BENEFITFOCUS INC's earnings per share declined by 7.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BENEFITFOCUS INC reported poor results of -$2.51 versus -$0.62 in the prior year. This year, the market expects an improvement in earnings (-$2.13 versus -$2.51).
  • After a year of stock price fluctuations, the net result is that BNFT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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