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Omnicare (OCR) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Omnicare ( OCR) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Omnicare as such a stock due to the following factors:

  • OCR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.6 million.
  • OCR has traded 1.2 million shares today.
  • OCR traded in a range 252.8% of the normal price range with a price range of $2.11.
  • OCR traded below its daily resistance level (quality: 29 days, meaning that the stock is crossing a resistance level set by the last 29 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on OCR:

Omnicare, Inc. operates as a healthcare services company that specializes in the management of pharmaceutical care in the United States and Canada. The company operates in two segments, Long-Term Care Group and Specialty Care Group. The stock currently has a dividend yield of 1%. OCR has a PE ratio of 26.5. Currently there are 5 analysts that rate Omnicare a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Omnicare has been 1.0 million shares per day over the past 30 days. Omnicare has a market cap of $5.7 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.22 and a short float of 8.3% with 10.81 days to cover. Shares are up 51.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Omnicare as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • OMNICARE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, OMNICARE INC increased its bottom line by earning $1.74 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($3.60 versus $1.74).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 179.4% when compared to the same quarter one year prior, rising from $18.69 million to $52.22 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, OCR has a quick ratio of 1.50, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 182.35% and other important driving factors, this stock has surged by 68.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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