BRF (BRFS): Today's Weak On High Volume Stock

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 $26.9 million.
  • BRFS has traded 188,324 shares today.
  • BRFS is trading at 2.28 times the normal volume for the stock at this time of day.
  • BRFS is trading at a new low 4.01% 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 1.8%. BRFS has a PE ratio of 3. Currently there are no analysts that rate BRF a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for BRF has been 1.7 million shares per day over the past 30 days. BRF has a market cap of $12.1 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 10.9% year-to-date as of the close of trading on Tuesday.

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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 notable return on equity, attractive valuation levels and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Food Products industry and the overall market, BRF SA's return on equity exceeds that of both the industry average and the S&P 500.
  • BRF SA has improved earnings per share by 12.8% 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, BRF SA reported lower earnings of $0.89 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($2.76 versus $0.89).
  • The gross profit margin for BRF SA is currently lower than what is desirable, coming in at 33.06%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 16.14% has significantly outperformed against the industry average.
  • Net operating cash flow has significantly decreased to $86.22 million or 83.40% 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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