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WebMD Health Corporation (WBMD) In A Perilous Reversal

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 WebMD Health Corporation ( WBMD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified WebMD Health Corporation as such a stock due to the following factors:

  • WBMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.0 million.
  • WBMD has traded 2.1 million shares today.
  • WBMD is down 5% today.
  • WBMD was up 8.5% yesterday.

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More details on WBMD:

WebMD Health Corp. provides health information services to consumers, physicians and other healthcare professionals, employers, and health plans through its public and private online portals, mobile platforms, and health-focused publications in the United States. Currently there are 2 analysts that rate WebMD Health Corporation a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for WebMD Health Corporation has been 930,300 shares per day over the past 30 days. WebMD Health has a market cap of $1.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.23 and a short float of 14.6% with 5.04 days to cover. Shares are up 158.8% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WebMD Health Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • WBMD's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 11.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 147.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although WBMD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • WEBMD HEALTH CORP 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, WEBMD HEALTH CORP swung to a loss, reporting -$0.44 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus -$0.44).
  • Currently the debt-to-equity ratio of 1.86 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.96, which shows the ability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, WEBMD HEALTH CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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