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Sirona Dental Systems (SIRO) Showing Signs Of Being Water-Logged And Getting Wetter

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 Sirona Dental Systems ( SIRO) 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 Sirona Dental Systems as such a stock due to the following factors:

  • SIRO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.3 million.
  • SIRO has traded 529,405 shares today.
  • SIRO traded in a range 222.9% of the normal price range with a price range of $2.95.
  • SIRO traded below its daily resistance level (quality: 44 days, meaning that the stock is crossing a resistance level set by the last 44 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 SIRO:

Sirona Dental Systems, Inc., together with its subsidiaries, develops, manufactures, and markets dental equipment for dentists worldwide. It operates in four segments: Dental CAD/CAM Systems, Imaging Systems, Treatment Centers, and Instruments. SIRO has a PE ratio of 28.1. Currently there are 9 analysts that rate Sirona Dental Systems a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Sirona Dental Systems has been 462,600 shares per day over the past 30 days. Sirona Dental Systems has a market cap of $4.0 billion and is part of the health care sector and health services industry. The stock has a beta of 1.63 and a short float of 3.3% with 3.65 days to cover. Shares are up 12.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sirona Dental Systems as a buy. 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 17.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIRO's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SIRO has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SIRONA DENTAL SYSTEMS INC has improved earnings per share by 35.8% 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, SIRONA DENTAL SYSTEMS INC increased its bottom line by earning $2.36 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($3.40 versus $2.36).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Equipment & Supplies industry average. The net income increased by 33.8% when compared to the same quarter one year prior, rising from $30.30 million to $40.55 million.
  • Net operating cash flow has increased to $70.37 million or 19.43% when compared to the same quarter last year. In addition, SIRONA DENTAL SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of -56.33%.

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