Strong On High Relative Volume: BRF (BRFS)

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

  • BRFS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.0 million.
  • BRFS has traded 174,162 shares today.
  • BRFS is trading at 2.10 times the normal volume for the stock at this time of day.
  • BRFS is trading at a new high 3.04% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 BRFS:

BRF S.A., together with its subsidiaries, focuses on raising, producing, and slaughtering poultry, pork, and beef in Brazil. It operates in three segments: Domestic Market (Brazil), Foreign Market (International), and Food Service. The stock currently has a dividend yield of 1.3%. BRFS has a PE ratio of 43. Currently there are 4 analysts that rate BRF a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for BRF has been 1.2 million shares per day over the past 30 days. BRF has a market cap of $17.8 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 11.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BRF as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • BRF SA has improved earnings per share by 6.3% 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 year. We feel that this trend should continue. During the past fiscal year, BRF SA increased its bottom line by earning $0.92 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($3.11 versus $0.92).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 4.3% when compared to the same quarter one year prior, going from $139.88 million to $145.91 million.
  • 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. Compared to other companies in the Food Products industry and the overall market on the basis of return on equity, BRF SA has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has increased to $465.09 million or 10.77% when compared to the same quarter last year. Despite an increase in cash flow of 10.77%, BRF SA is still growing at a significantly lower rate than the industry average of 69.57%.

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