BRF (BRFS) Highlighted As Weak On High Volume

Trade-Ideas LLC identified BRF ( BRFS) as a weak 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 $25.8 million.
  • BRFS has traded 564,536 shares today.
  • BRFS is trading at 6.41 times the normal volume for the stock at this time of day.
  • BRFS is trading at a new low 12.01% 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 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 1.4%. BRFS has a PE ratio of 36. Currently there are 2 analysts that rate BRF a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for BRF has been 2.1 million shares per day over the past 30 days. BRF has a market cap of $14.8 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 26% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BRF as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 35.62% is the gross profit margin for BRF SA which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.50% is above that of the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.78, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • BRFS has underperformed the S&P 500 Index, declining 24.41% from its price level of one year ago. 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.
  • Net operating cash flow has significantly decreased to $257.98 million or 53.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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