Trade-Ideas: Hersha Hospitality (HT) Is Today's Weak On High Relative Volume Stock

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

  • HT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.7 million.
  • HT has traded 52,822 shares today.
  • HT is trading at 5.20 times the normal volume for the stock at this time of day.
  • HT is trading at a new low 4.07% 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 HT:

Operates as a Maryland REIT that focuses primarily on owning and operating high quality, upscale and mid-scale limited service and extended-stay hotels. Its portfolio consisted of 31 wholly-owned limited and full service properties and joint venture investments in 16 hotels as of Dec. 31, 2005. The stock currently has a dividend yield of 6.2%. HT has a PE ratio of 4. Currently there are 3 analysts that rate Hersha Hospitality a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Hersha Hospitality has been 463,800 shares per day over the past 30 days. Hersha has a market cap of $801.0 million and is part of the financial sector and real estate industry. The stock has a beta of 1.35 and a short float of 18.3% with 10.38 days to cover. Shares are down 18.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hersha Hospitality as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • HERSHA HOSPITALITY TRUST has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, HERSHA HOSPITALITY TRUST reported lower earnings of $0.57 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.57).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 95.9% when compared to the same quarter one year ago, falling from -$3.95 million to -$7.73 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, HERSHA HOSPITALITY TRUST's return on equity is below that of both the industry average and the S&P 500.

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