Weak On High Volume: Celadon Group (CGI)

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

  • CGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.2 million.
  • CGI has traded 58,257 shares today.
  • CGI is trading at 4.71 times the normal volume for the stock at this time of day.
  • CGI is trading at a new low 5.09% 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 CGI:

Celadon Group, Inc., through its subsidiaries, provides transportation services between the United States, Canada, and Mexico. The company operates through two segments, Asset-Based and Asset-Light. The stock currently has a dividend yield of 1%. CGI has a PE ratio of 6. Currently there are 5 analysts that rate Celadon Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Celadon Group has been 337,000 shares per day over the past 30 days. Celadon Group has a market cap of $232.8 million and is part of the services sector and transportation industry. The stock has a beta of 1.46 and a short float of 9% with 4.51 days to cover. Shares are down 16.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celadon Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.8%. Since the same quarter one year prior, revenues rose by 12.0%. 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.
  • CELADON GROUP INC's earnings per share declined by 47.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CELADON GROUP INC increased its bottom line by earning $1.53 versus $1.30 in the prior year. For the next year, the market is expecting a contraction of 31.4% in earnings ($1.05 versus $1.53).
  • The debt-to-equity ratio of 1.41 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CGI maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Road & Rail industry and the overall market, CELADON GROUP INC'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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