Trade-Ideas: A10 Networks (ATEN) 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 A10 Networks ( ATEN) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified A10 Networks as such a stock due to the following factors:

  • ATEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.6 million
  • ATEN has traded 122,881 shares today
  • ATEN is trading at 2.34 times the normal volume for the stock at this time of day
  • ATEN is trading at a new low 3.001496667294799802760962847969494760036468505859375 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 ATEN:

A10 Networks, Inc. provides software based application networking solutions in the United States, Japan, and internationally. Its solutions are built on advanced core operating system platform. Currently there are five analysts that rate A10 Networks a buy, no analysts rate it a sell, and three rate it a hold.

The average volume for A10 Networks has been 426,000 shares per day over the past 30 days. A10 has a market cap of $427 million and is part of the technology sector and telecommunications industry. Shares are up 52.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates A10 Networks as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 169.2% when compared to the same quarter one year ago, falling from -$5.10 million to -$13.73 million.
  • Net operating cash flow has significantly decreased to -$5.50 million or 85.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for A10 NETWORKS INC is currently very high, coming in at 81.15%. Regardless of ATEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATEN's net profit margin of -31.20% significantly underperformed when compared to the industry average.
  • A10 NETWORKS INC 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. This year, the market expects an improvement in earnings (-$0.52 versus -$0.59).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.3%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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