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

  • TKR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.6 million.
  • TKR has traded 67,632 shares today.
  • TKR is trading at 3.18 times the normal volume for the stock at this time of day.
  • TKR is trading at a new low 4.03% 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 TKR:

The Timken Company engineers, manufactures, and markets bearings, transmissions, gearboxes, and chain and related products worldwide. It operates in two segments: Mobile Industries and Process Industries. The stock currently has a dividend yield of 4.2%. TKR has a PE ratio of 496. Currently there are 5 analysts that rate Timken a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Timken has been 771,600 shares per day over the past 30 days. Timken has a market cap of $2.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.45 and a short float of 6.6% with 5.38 days to cover. Shares are down 13.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Timken as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 389.5% when compared to the same quarter one year prior, rising from -$21.90 million to $63.40 million.
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • TIMKEN CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TIMKEN CO reported lower earnings of $1.60 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.60).
  • 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 Machinery industry and the overall market, TIMKEN CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • TKR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.63%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, TKR is still more expensive than most of the other companies in its industry.

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