Omnova Solutions (OMN) Is Today's Strong On High Volume Stock

Trade-Ideas LLC identified Omnova Solutions ( OMN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Omnova Solutions as such a stock due to the following factors:

  • OMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.7 million.
  • OMN has traded 181,159 shares today.
  • OMN is trading at 19.78 times the normal volume for the stock at this time of day.
  • OMN is trading at a new high 6.15% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 OMN:

OMNOVA Solutions Inc. provides emulsion polymers, specialty chemicals, and engineered surfaces for various commercial, industrial, and residential end uses in North America, Europe, and Asia. The company operates in two segments, Performance Chemicals and Engineered Surfaces. Currently there are 2 analysts that rate Omnova Solutions a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Omnova Solutions has been 205,100 shares per day over the past 30 days. Omnova has a market cap of $362.4 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.02 and a short float of 2.9% with 2.49 days to cover. Shares are up 37.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Omnova Solutions as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally high debt management risk and poor profit margins.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, OMNOVA SOLUTIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, OMN has managed to keep a strong quick ratio of 1.54, which demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for OMNOVA SOLUTIONS INC is currently lower than what is desirable, coming in at 28.91%. Regardless of OMN'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 3.56% trails the industry average.
  • OMN, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • OMNOVA SOLUTIONS 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, OMNOVA SOLUTIONS INC swung to a loss, reporting -$0.42 versus $0.26 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus -$0.42).

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