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Stock To Watch: Accuray (ARAY) In 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 Accuray (ARAY) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Accuray as such a stock due to the following factors:

  • ARAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.1 million.
  • ARAY has traded 133,912 shares today.
  • ARAY is down 3.8% today.
  • ARAY was up 15.3% yesterday.

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More details on ARAY:

Accuray Incorporated designs, develops, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. Currently there are 5 analysts that rate Accuray a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Accuray has been 970,100 shares per day over the past 30 days. Accuray has a market cap of $667.9 million and is part of the health care sector and health services industry. The stock has a beta of 1.89 and a short float of 36.9% with 9.96 days to cover. Shares are up 2.5% year-to-date as of the close of trading on Thursday.

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 Accuray as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:

  • 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 Health Care Equipment & Supplies industry and the overall market, ACCURAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ARAY's quick ratio is somewhat strong at 1.36, demonstrating the ability to handle short-term liquidity needs.
  • ACCURAY INC 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, ACCURAY INC reported poor results of -$1.32 versus -$1.02 in the prior year. This year, the market expects an improvement in earnings (-$0.68 versus -$1.32).
  • 46.24% is the gross profit margin for ACCURAY INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.81% is in-line with the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 81.3% when compared to the same quarter one year prior, rising from -$29.17 million to -$5.44 million.

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