Weak On High Volume: Tenaris (TS)

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

  • TS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.9 million.
  • TS has traded 395,478 shares today.
  • TS is trading at 2.23 times the normal volume for the stock at this time of day.
  • TS is trading at a new low 4.01% 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 TS:

Tenaris S.A., through its subsidiaries, manufactures and distributes steel pipe products and other related services for the oil and gas industry, and other industrial applications. The stock currently has a dividend yield of 3.2%. Currently there is 1 analyst that rates Tenaris a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Tenaris has been 2.6 million shares per day over the past 30 days. Tenaris has a market cap of $16.7 billion and is part of the basic materials sector and metals & mining industry. Shares are up 16.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • TS's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TS has a quick ratio of 1.96, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • TS, with its decline in revenue, slightly underperformed the industry average of 35.8%. Since the same quarter one year prior, revenues fell by 44.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for TENARIS SA is currently lower than what is desirable, coming in at 34.02%. It has decreased from the same quarter the previous year.
  • Net operating cash flow has significantly decreased to $309.15 million or 64.78% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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