Today's Weak On High Volume Stock: Isle Of Capri Casinos (ISLE)

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

  • ISLE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.2 million.
  • ISLE has traded 332,403 shares today.
  • ISLE is trading at 12.24 times the normal volume for the stock at this time of day.
  • ISLE is trading at a new low 7.02% 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 ISLE:

Isle of Capri Casinos, Inc., together with its subsidiaries, develops, owns, and operates regional gaming facilities and related dining, lodging, and entertainment facilities in the United States. ISLE has a PE ratio of 26. Currently there is 1 analyst that rates Isle of Capri Casinos a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Isle of Capri Casinos has been 289,200 shares per day over the past 30 days. Isle of Capri Casinos has a market cap of $801.0 million and is part of the services sector and leisure industry. The stock has a beta of 1.26 and a short float of 2.8% with 0.88 days to cover. Shares are up 139.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Isle of Capri Casinos as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ISLE OF CAPRI CASINOS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ISLE OF CAPRI CASINOS INC turned its bottom line around by earning $0.12 versus -$3.25 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.12).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, ISLE OF CAPRI CASINOS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Powered by its strong earnings growth of 102.27% and other important driving factors, this stock has surged by 200.14% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The debt-to-equity ratio is very high at 42.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ISLE maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.

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