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Edwards Life (EW) 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 Edwards Life ( EW) 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 Edwards Life as such a stock due to the following factors:

  • EW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $102.1 million.
  • EW has traded 1.0 million shares today.
  • EW traded in a range 210.4% of the normal price range with a price range of $3.08.
  • EW traded below its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 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 EW:

Edwards Lifesciences Corporation provides products and technologies to treat structural heart disease and critically ill patients worldwide. EW has a PE ratio of 20.4. Currently there are 6 analysts that rate Edwards Life a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Edwards Life has been 1.5 million shares per day over the past 30 days. Edwards Life has a market cap of $7.9 billion and is part of the health care sector and health services industry. The stock has a beta of 0.73 and a short float of 6.8% with 4.22 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Edwards Life as a hold. 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 and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 10.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.24, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for EDWARDS LIFESCIENCES CORP is currently very high, coming in at 77.56%. Regardless of EW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.51% trails the industry average.
  • EW's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.60%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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