EZChip Semiconductor (EZCH) Strong On High Relative Volume Today

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

  • EZCH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • EZCH has traded 139,715 shares today.
  • EZCH is trading at 7.28 times the normal volume for the stock at this time of day.
  • EZCH is trading at a new high 6.11% 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 EZCH:

EZchip Semiconductor Ltd., a fabless semiconductor company, develops and markets Ethernet network processors for networking equipment in Israel, China, Hong Kong, the Far East, Canada, the United States, Europe, and internationally. EZCH has a PE ratio of 23. Currently there is 1 analyst that rates EZChip Semiconductor a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for EZChip Semiconductor has been 125,000 shares per day over the past 30 days. EZChip Semiconductor has a market cap of $505.3 million and is part of the technology sector and electronics industry. The stock has a beta of 1.24 and a short float of 2.8% with 5.81 days to cover. Shares are down 1.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EZChip Semiconductor as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 235.8% when compared to the same quarter one year ago, falling from $6.09 million to -$8.27 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, EZCHIP SEMICONDUCTOR LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.87 million or 122.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 233.33% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • EZCHIP SEMICONDUCTOR LTD 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, EZCHIP SEMICONDUCTOR LTD reported lower earnings of $0.31 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.31).

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