XPO Logistics (XPO) Highlighted As Weak On High Volume

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

  • XPO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.1 million.
  • XPO has traded 135,721 shares today.
  • XPO is trading at 2.69 times the normal volume for the stock at this time of day.
  • XPO is trading at a new low 3.05% 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 XPO:

XPO Logistics, Inc. provides transportation and logistics services primarily in the United States. The company operates through two segments, Transportation and Logistics. Currently there are 10 analysts that rate XPO Logistics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for XPO Logistics has been 1.0 million shares per day over the past 30 days. XPO Logistics has a market cap of $3.9 billion and is part of the services sector and transportation industry. The stock has a beta of 0.79 and a short float of 18.5% with 7.70 days to cover. Shares are up 18% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates XPO Logistics 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 solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • XPO's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 148.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.86, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Air Freight & Logistics industry and the overall market, XPO LOGISTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for XPO LOGISTICS INC is rather low; currently it is at 17.88%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.09% trails that of the industry average.

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