Weak On High Volume: Sucampo Pharmaceuticals (SCMP)

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

  • SCMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.3 million.
  • SCMP has traded 83,979 shares today.
  • SCMP is trading at 3.94 times the normal volume for the stock at this time of day.
  • SCMP is trading at a new low 3.22% 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 SCMP:

Sucampo Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research and development of proprietary drugs for the treatment of gastrointestinal, ophthalmic, autoimmune, and oncology-based inflammatory disorders in the United States, Japan, Switzerland, and internationally. SCMP has a PE ratio of 24. Currently there are 5 analysts that rate Sucampo Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Sucampo Pharmaceuticals has been 602,900 shares per day over the past 30 days. Sucampo has a market cap of $568.7 million and is part of the health care sector and drugs industry. The stock has a beta of 0.99 and a short float of 9.4% with 5.23 days to cover. Shares are down 28.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sucampo Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • SCMP's very impressive revenue growth greatly exceeded the industry average of 1.1%. Since the same quarter one year prior, revenues leaped by 60.1%. 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Pharmaceuticals industry and the overall market, SUCAMPO PHARMACEUTICALS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • SUCAMPO PHARMACEUTICALS INC 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. 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, SUCAMPO PHARMACEUTICALS INC increased its bottom line by earning $0.74 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.74).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.64%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 171.42% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 163.3% when compared to the same quarter one year ago, falling from $6.41 million to -$4.06 million.

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