Weak On High Volume: Greenbrier Companies (GBX)

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

  • GBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.7 million.
  • GBX has traded 70,661 shares today.
  • GBX is trading at 3.52 times the normal volume for the stock at this time of day.
  • GBX is trading at a new low 3.04% 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 GBX:

The Greenbrier Companies, Inc. designs, manufactures, and markets railroad freight car equipment in North America and Europe. The stock currently has a dividend yield of 1.1%. GBX has a PE ratio of 11. Currently there are 5 analysts that rate Greenbrier Companies a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Greenbrier Companies has been 657,500 shares per day over the past 30 days. Greenbrier Companies has a market cap of $1.4 billion and is part of the services sector and transportation industry. The stock has a beta of 1.05 and a short float of 32.6% with 11.63 days to cover. Shares are down 0.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Greenbrier Companies as a buy. 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, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 25.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Machinery industry and the overall market, GREENBRIER COMPANIES INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • GREENBRIER COMPANIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GREENBRIER COMPANIES INC turned its bottom line around by earning $3.45 versus -$0.66 in the prior year. This year, the market expects an improvement in earnings ($5.95 versus $3.45).

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