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

  • ZEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.8 million.
  • ZEN has traded 340,718 shares today.
  • ZEN is trading at 12.29 times the normal volume for the stock at this time of day.
  • ZEN 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 ZEN:

Zendesk, Inc., a software development company, provides software as a service customer service platform for organizations. Currently there are 7 analysts that rate Zendesk a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Zendesk has been 860,400 shares per day over the past 30 days. Zendesk has a market cap of $1.9 billion and is part of the technology sector and computer software & services industry. Shares are down 19.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Zendesk as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$0.18 million or 103.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ZEN'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 39.23%, 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. 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.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income has decreased by 5.6% when compared to the same quarter one year ago, dropping from -$17.92 million to -$18.93 million.
  • Compared to other companies in the Software industry and the overall market, ZENDESK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ZENDESK INC is currently very high, coming in at 78.13%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -34.00% is in-line with the industry average.

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