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Actavis (ACT) Reaches New Lifetime High 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 Actavis ( ACT) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Actavis as such a stock due to the following factors:

  • ACT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $164.5 million.
  • ACT has traded 2.3 million shares today.
  • ACT is trading at a new lifetime high.

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More details on ACT:

Actavis plc, an integrated specialty pharmaceutical company, develops, manufactures, markets, and distributes pharmaceutical products in the United States, Canada, and internationally. Currently there are 11 analysts that rate Actavis a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Actavis has been 1.2 million shares per day over the past 30 days. Actavis has a market cap of $29.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.36 and a short float of 1.1% with 1.51 days to cover. Shares are up 1.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:

  • ACT's very impressive revenue growth greatly exceeded the industry average of 2.5%. Since the same quarter one year prior, revenues leaped by 56.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, ACT's share price has jumped by 99.56%, exceeding the performance of the broader market during that same time frame. Although ACT 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.
  • The gross profit margin for ACTAVIS PLC is rather high; currently it is at 51.37%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ACT's net profit margin of 3.25% significantly trails the industry average.
  • Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, ACT has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Pharmaceuticals industry and the overall market, ACTAVIS PLC's return on equity significantly trails that of both the industry average and the S&P 500.

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