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

  • WLB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.8 million.
  • WLB has traded 57,471 shares today.
  • WLB is trading at 8.83 times the normal volume for the stock at this time of day.
  • WLB is trading at a new low 3.02% 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 WLB:

Westmoreland Coal Company, through its subsidiaries, operates as an energy company. The company engages in the production and sale of sub-bituminous coal and lignite to plants that generate electricity. Currently there are 4 analysts that rate Westmoreland Coal a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Westmoreland Coal has been 153,200 shares per day over the past 30 days. Westmoreland Coal has a market cap of $396.9 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.49 and a short float of 7.4% with 5.59 days to cover. Shares are down 34.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Westmoreland Coal as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for WESTMORELAND COAL CO is rather low; currently it is at 20.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.15% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $1.64 million or 94.46% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • WLB's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 37.03%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • WESTMORELAND COAL CO has improved earnings per share by 48.5% 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, WESTMORELAND COAL CO reported poor results of -$10.85 versus -$0.42 in the prior year. This year, the market expects an improvement in earnings (-$2.09 versus -$10.85).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 38.3% when compared to the same quarter one year prior, rising from -$19.03 million to -$11.73 million.

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