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

  • DEG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.4 million.
  • DEG has traded 381,747 shares today.
  • DEG is trading at 15.21 times the normal volume for the stock at this time of day.
  • DEG is trading at a new low 7.01% 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 DEG:

Etablissements Delhaize Freres et Cie 'Le Lion' (Groupe Delhaize) Societe Anonyme, together with its subsidiaries, operates food supermarkets. It also operates other store formats, including proximity, cash and carry, and specialty stores. The stock currently has a dividend yield of 1.4%. DEG has a PE ratio of 8. Currently there are 2 analysts that rate Delhaize Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Delhaize Group has been 157,200 shares per day over the past 30 days. Delhaize Group has a market cap of $9.4 billion and is part of the services sector and retail industry. Shares are up 35.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Delhaize Group as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance 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:
  • Compared to its closing price of one year ago, DEG's share price has jumped by 36.30%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DEG's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • DELHAIZE GROUP - ETS DLHZ FR 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. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, DELHAIZE GROUP - ETS DLHZ FR reported lower earnings of $0.55 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $0.55).
  • DEG, with its decline in revenue, slightly underperformed the industry average of 5.0%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for DELHAIZE GROUP - ETS DLHZ FR is currently lower than what is desirable, coming in at 27.56%. Regardless of DEG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.47% trails the industry average.

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