Trade-Ideas: Qualys (QLYS) Is Today's Weak On High Relative Volume Stock

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

  • QLYS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.0 million.
  • QLYS has traded 160,888 shares today.
  • QLYS is trading at 2.05 times the normal volume for the stock at this time of day.
  • QLYS is trading at a new low 4.01% 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 QLYS:

Qualys, Inc. provides cloud security and compliance solutions in the United States and internationally. QLYS has a PE ratio of 52. Currently there are 5 analysts that rate Qualys a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Qualys has been 773,000 shares per day over the past 30 days. Qualys has a market cap of $1.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of -0.59 and a short float of 9.1% with 3.50 days to cover. Shares are up 24.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Qualys as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including premium valuation and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 23.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QLYS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, QLYS has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for QUALYS INC is currently very high, coming in at 87.25%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, QLYS's net profit margin of 8.00% significantly trails the industry average.
  • Net operating cash flow has decreased to $10.03 million or 33.49% 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.

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