Weak On High Volume: Spartan Motors (SPAR)

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

  • SPAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.2 million.
  • SPAR has traded 92,140 shares today.
  • SPAR is trading at 6.56 times the normal volume for the stock at this time of day.
  • SPAR is trading at a new low 8.04% 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 SPAR:

Spartan Motors, Inc., through its subsidiaries, engineers, manufactures, and sells heavy-duty and custom vehicles in the United States, Canada, South America, and Asia. The stock currently has a dividend yield of 1.6%. Currently there are no analysts that rate Spartan Motors a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Spartan Motors has been 290,500 shares per day over the past 30 days. Spartan has a market cap of $217.3 million and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.00 and a short float of 0.7% with 0.26 days to cover. Shares are up 136% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Spartan Motors as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • SPAR's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SPAR's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • SPARTAN MOTORS INC reported significant earnings per share improvement 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, SPARTAN MOTORS INC swung to a loss, reporting -$0.51 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus -$0.51).
  • The gross profit margin for SPARTAN MOTORS INC is currently extremely low, coming in at 13.17%. Regardless of SPAR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.40% trails the industry average.
  • 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. Compared to other companies in the Auto Components industry and the overall market, SPARTAN MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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