Today's Weak On High Volume Stock: Ferro (FOE)

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

  • FOE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.0 million.
  • FOE has traded 99,999 shares today.
  • FOE is trading at 4.45 times the normal volume for the stock at this time of day.
  • FOE is trading at a new low 5.27% 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 FOE:

Ferro Corporation, together with its subsidiaries, produces specialty materials in the United States and internationally. It operates through four business units: Tile Coating Systems; Porcelain Enamel; Performance Colors and Glass; and Pigments, Powders and Oxides. FOE has a PE ratio of 9. Currently there are 6 analysts that rate Ferro a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ferro has been 613,000 shares per day over the past 30 days. Ferro has a market cap of $813.2 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.88 and a short float of 3.4% with 3.65 days to cover. Shares are down 12.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ferro as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 1.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Even though the current debt-to-equity ratio is 1.40, it is still below the industry average, suggesting that this level of debt is acceptable within the Chemicals industry. Despite the fact that FOE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.51 is high and demonstrates strong liquidity.
  • 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 Chemicals industry. The net income has significantly decreased by 108.6% when compared to the same quarter one year ago, falling from $47.47 million to -$4.06 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Chemicals industry and the overall market, FERRO CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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