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 $14.0 million.
  • ZEN has traded 361,071 shares today.
  • ZEN is trading at 4.63 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 1.1 million 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 20.4% year-to-date as of the close of trading on Wednesday.

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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 deteriorating net income, 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 Software industry. The net income has significantly decreased by 39.9% when compared to the same quarter one year ago, falling from -$17.49 million to -$24.48 million.
  • ZEN is off 5.43% from its price level of one year ago, reflecting a combination of (a) the general market trend and (b) the company's own weaknesses, including its lower earnings per share compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • ZENDESK INC's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ZENDESK INC reported poor results of -$0.99 versus -$0.95 in the prior year. This year, the market expects an improvement in earnings (-$0.33 versus -$0.99).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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 78.26%. 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 -39.07% is in-line with the industry average.

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