Trade-Ideas: 51job (JOBS) 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 51job ( JOBS) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified 51job as such a stock due to the following factors:

  • JOBS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.5 million.
  • JOBS has traded 196,340 shares today.
  • JOBS is trading at 22.01 times the normal volume for the stock at this time of day.
  • JOBS is trading at a new low 4.15% 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 JOBS:

51job, Inc., through its subsidiaries, provides integrated human resource services in the People's Republic of China. JOBS has a PE ratio of 2.

The average volume for 51job has been 201,200 shares per day over the past 30 days. 51job has a market cap of $2.0 billion and is part of the services sector and diversified services industry. Shares are down 7.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates 51job as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • JOBS's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.87, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for 51JOB INC -ADR is currently very high, coming in at 70.73%. Regardless of JOBS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JOBS's net profit margin of 15.48% compares favorably to the industry average.
  • 51JOB INC -ADR's earnings per share declined by 49.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, 51JOB INC -ADR reported lower earnings of $1.03 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.03).
  • 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 Professional Services industry. The net income has significantly decreased by 52.5% when compared to the same quarter one year ago, falling from $26.27 million to $12.47 million.

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