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

  • NNBR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • NNBR has traded 163,994 shares today.
  • NNBR is trading at 28.21 times the normal volume for the stock at this time of day.
  • NNBR is trading at a new low 12.19% 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 NNBR:

NN, Inc. manufactures and sells metal bearing, plastic and rubber, and precision metal components for bearing, automotive, and industrial parts manufacturers worldwide. The stock currently has a dividend yield of 1%. NNBR has a PE ratio of 6. Currently there are 2 analysts that rate NN a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for NN has been 135,700 shares per day over the past 30 days. NN has a market cap of $549.5 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.05 and a short float of 11.7% with 20.70 days to cover. Shares are up 39.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NN as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • NNBR's very impressive revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues leaped by 59.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Machinery industry average. The net income increased by 14.6% when compared to the same quarter one year prior, going from $5.24 million to $6.00 million.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • NN INC has improved earnings per share by 6.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NN INC reported lower earnings of $0.45 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $0.45).
  • The debt-to-equity ratio is very high at 2.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, NNBR's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.

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