Altisource Residential (RESI) Highlighted As Weak On High Volume

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

  • RESI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.2 million.
  • RESI has traded 61,082 shares today.
  • RESI is trading at 2.46 times the normal volume for the stock at this time of day.
  • RESI is trading at a new low 3.02% 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 RESI:

Altisource Residential Corporation, through its subsidiary, Altisource Residential, L.P., focuses on acquiring, owning, and managing single-family rental properties in the United States. The stock currently has a dividend yield of 3.1%. RESI has a PE ratio of 12. Currently there is 1 analyst that rates Altisource Residential a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Altisource Residential has been 497,400 shares per day over the past 30 days. Altisource has a market cap of $732.4 million and is part of the financial sector and real estate industry. The stock has a beta of 1.55 and a short float of 7.4% with 3.32 days to cover. Shares are down 33.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Altisource Residential as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 114.2% when compared to the same quarter one year ago, falling from $37.68 million to -$5.36 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ALTISOURCE RESIDENTIAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for ALTISOURCE RESIDENTIAL CORP is currently extremely low, coming in at 12.96%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.16% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.73%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 113.63% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • ALTISOURCE RESIDENTIAL CORP 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 company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ALTISOURCE RESIDENTIAL CORP increased its bottom line by earning $3.33 versus $1.16 in the prior year. For the next year, the market is expecting a contraction of 77.6% in earnings ($0.75 versus $3.33).

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