KapStone Paper And Packaging (KS) Weak On High 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 KapStone Paper And Packaging ( KS) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified KapStone Paper And Packaging as such a stock due to the following factors:

  • KS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.8 million.
  • KS has traded 255,965 shares today.
  • KS is trading at 4.41 times the normal volume for the stock at this time of day.
  • KS is trading at a new low 5.02% 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 KS:

KapStone Paper and Packaging Corporation manufactures and sells containerboards, corrugated products, and specialty paper products in the United States and internationally. The stock currently has a dividend yield of 1.1%. KS has a PE ratio of 15. Currently there are 5 analysts that rate KapStone Paper And Packaging a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for KapStone Paper And Packaging has been 778,900 shares per day over the past 30 days. KapStone Paper And Packaging has a market cap of $2.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.50 and a short float of 3.3% with 4.06 days to cover. Shares are down 10.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates KapStone Paper And Packaging as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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 Paper & Forest Products industry and the overall market, KAPSTONE PAPER & PACKAGING's return on equity exceeds that of both the industry average and the S&P 500.
  • KAPSTONE PAPER & PACKAGING's earnings per share declined by 18.2% 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, KAPSTONE PAPER & PACKAGING increased its bottom line by earning $1.77 versus $1.32 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.77).
  • KS, with its decline in revenue, slightly underperformed the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.34, it is still below the industry average, suggesting that this level of debt is acceptable within the Paper & Forest Products industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.99 is weak.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, KS has underperformed the S&P 500 Index, declining 14.55% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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