Trade-Ideas: Actuant (ATU) Is Today's Weak On High Relative Volume Stock

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

  • ATU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.7 million.
  • ATU has traded 128,372 shares today.
  • ATU is trading at 6.96 times the normal volume for the stock at this time of day.
  • ATU is trading at a new low 5.08% 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 ATU:

Actuant Corporation designs, manufactures, and distributes a range of industrial products and systems worldwide. It operates in three segments: Industrial, Energy, and Engineered Solutions. The stock currently has a dividend yield of 0.2%. ATU has a PE ratio of 42. Currently there are 3 analysts that rate Actuant a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Actuant has been 548,800 shares per day over the past 30 days. Actuant has a market cap of $1.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.53 and a short float of 3.3% with 3.73 days to cover. Shares are down 11.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Actuant as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 293.67% to $15.50 million when compared to the same quarter last year. In addition, ACTUANT CORP has also vastly surpassed the industry average cash flow growth rate of -21.56%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.3%. Since the same quarter one year prior, revenues slightly dropped by 8.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ACTUANT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ACTUANT CORP reported lower earnings of $1.95 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($1.66 versus $1.95).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 256.6% when compared to the same quarter one year ago, falling from $41.39 million to -$64.84 million.

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